@Dodece: I have thought about their recent silence before, and I attributed it to the same reason as you... Spooking out the masses before Christmas is always a bad idea.

In fact I was somewhat caught by surprise with the timing of their announcement regarding layoffs.

It's pretty much certain that more announcements will happen in the next year. Probably in January, but certainly no later than February, lest their stock value get dangerously close to zero. That is of course assuming the Japanese central bank or government doesn't come riding in their shining armor to rescue the day for Japanese exporters. In that case it seems like it would be more of a clash between Japanese policies and what the other Western governments are doing.

Canceling the PS3 is the most drastic measure. But there are many stops before you get to the terminal station.

How about we start with just raising the PS3 price? Or maybe closing a bunch of studios? Or perhaps even raising the price of the games by another $5? Perhaps it is time to charge for PSN?

All of these steps would have been inconcievable just 6 months ago but will be accepted with much more understanding if the alternative is the lose of the whole division.

I think that is a mile off to be honest. The only real gripe the world seems to have with the PS3 is price, and that is only because MS and Nintendo have changed the market landscape.
I think talk of a company with 117.5 billion US$ worth of assets acting as twitchy as you are making out wouldn't have the same management for long.

This thread is ridiculous. It is basically a cheer leading section for anti sony. Yall got anything better to do?

Also...a few things to consider...strong yen, means they are paying less in other countries where the PS3 is made and assembled. That will offset more than people think. Because if the cost of the machine is going down on a similar lvl to the revenue then they will still be in a decent position to cut the PS3. we have also not had any updates on the reduced cost of manufacturing.

Sony as a whole is doing fine, it is hurting like other companies that produce consumer products that people really don't need.

Time will tell, but seriously some of you need to get a life better than hoping with the deepest pit of your heart that sony will fail so you can be right. It is not going to make your life any better if sony cancels the PS3.

@xenophon13: Thank you for providing the periodically mandatory post questioning the existence of an important discussion for the subject matter of this forum.

What you say regarding manufacturing is a mitigating factor as it has been repeatedly stated, but it's not enough as Sony's profit forecast revision proves.

Selling studios, or IP's....

What would EA pay for the rights of Gran Turismo? Multiplatform release on Wii, 360, PC, and PS3 would sell 10-15 million?

You really think the analysts and shareholders care about the PS3 price? Bah.

They only care about the business performance of Sony. From their perspective the PS3 is responsible for taking a highly profitable business division and turning it into a cash sinkhole. It is responsible from dropping Sony from a dominant "win the market by default" player to an struggling niche player in the console gaming market in just two short years.

From their perspective Sony's management made a serious of bad decisions with the PS3. Starting with misjudging the market needs, continueing with a costly product design, failing to secure the 3rd parties, delayed launch, non-competitive price point and lack of defining system seller tiltles. These are all things that a good management should have foreseen and avoided.

They care about what happens to the profits. What happens to the enterprise value of the company and what happens to the stock price. They are concerned that the current management with its poort track record cannot turn around the situation. That is what they care about.

These people are disappointed and enraged. They are out for blood. And they will get it.

You couldnt be more off track.  Analysts and shareholders who understand the entire companies market structure know thegaming sector alone is an incredibly small piece of the Sony pie that is only capable of at least breaking even on the most current product in the foreseeable future.  Analysts and shareholders who understand Sony's market structure are more focused on the dominate sectors of the company: eletronics, financial holdins and music.  While they care about profits of all sectors, these are the dominant sectors that will make or break the company and are experiencing the brunt of the effects from global fall in demand for electronic products, global recession and Yen appreciation.

You really need to get your numbers right. The problem with gaming is that it is small in sales but huge in loses.

Let's look at the cold hard numbers of Gaming vs Electronics in Q2 2008 (the last reported quarter):

Sony's Total Sales = $19.9B, Total Profit = 106M

Electronics Division: Sales = $15.9B, Profit = $727M

Game Division: Sales = $2.6B, Loss = $379M

So the "increadibly small piece of the Sony pie" is eating away HALF the profits of the Electronics division which is responsible for 80% of the company's revenue.

Just imagine that Sony shuts down the gaming division all together. The revenue will go down by 13% but the profits will increase by 370%. Not a bad trade-off!

"But... but... but... you are just showing a bad quarter to make your point" you must be thinking.

Well let's look back... in Q2 of 2007 Sony's losses from the gaming division where more than double those of Q2 2008 (almost 1.5 times worst). So 2008 is actually a major improvement over 2007.

The gaming division is not "increadibly small piece of the Sony pie". it is a major drag on the performance of the whole company. The fact that the total revenue of the division is so small makes things even worst for the gaming division. When such a small business unit has such an adverse result on the big company shareholders, analysts and management are all asking: "is it worth it? will it ever pay for itself? can we really afford such a luxery of a business that is losing so much money?"

Everyone is going to look for positive signs in the next financial reports. Competitively, the writing is already on the wall - Sony will not be a dominant player this generation, no matter what they do. Now all is left is to see if there is hope to actually make money even without dominance - something that Sony never had to do before. If the gaming division will fail to show that they are well on track to profitability then some significant action will be forced on it. 

 Source: http://www.sony.net/SonyInfo/IR/financial/fr/08q2_sony.pdf

All indications are, based on data provided, the gaming division to return to profitability between Q3 FY08 and sometime in FY09.  Positive sales growth in the division and continued drastic decline in operating loss attributed to PS3 and PSP sales and decreased PS3 production costs.  Though the division is still small within the company it is experiencing the largest growth in the company.  Falling software sales attributed to fall in PS2. 

So based on that entire report the gaming division is relatively a small portion of total company.  It is operating at a loss but experiencing the largest growth in the company and has improved 59.2% Y-O-Y.  Growth in division attributed to increased PS3 and PSP hardware sales and increase in PS3 and PSP software sales.  Sales of PS2 hardware and software fell Y-O-Y due to falling interest and support.  Based on the report linked by you there is little reason to cut a positive growth segment of a company with profitability possible Y-O-Y.  There is likely to be restructuring to reduce costs more which might include restructuring production process and a redistribution of resources currently in the decreasing areas of the sector( PS2 hardware and software cuts).  So a small portion of a company with the largest growth most certainly is a major drag on the company.  Lets talk about the segments with Y-O-Y decline shall we.