Actually according to this article the problem was not debt, just that they had to write-down the value of their purchase, as they later realized the studio was in trouble which reduced its value.

This year, the loss will apparently have immediate effect on Sony's cash.

@City17: Well, they don't look good in the long term either.

In related news, Sony Ericsson will post their earnings tomorrow (16th) at 8:30 AM (Central European Time).

Who cares? Sony owns a Blu Ray which won the format war and it will rule in 2010 as well as 2011 and 2012. in 2013, i think blu ray will be too cheap and won't be such a great profit for Sony.

How can you forecast $2.2bn profit in October and in January it is looking like a loss of $1bn? That's a difference of 3.2bn in only 3 months!!! If this is real then Sony must have the worst financial analysts in history. It's not like the economy wasn't already in a downturn by October.

sony does not own blue ray, nor do they have majority of its patents they are just the most vocal of its support 

Actually it is quite understandable. Sony usually has $90-$100 billion in revenue per year. Their profit margins are usually 1-4% (lately more to the 1% side), which means they usually have around $1-$4 billion in profit. If this profit margin reverses into a loss margin of equal size, you're quickly looking at $1-$4 billion in losses instead.

They're extremely vulnerable to the exchange rates, and with such profit margins the difference between posting their regular profits and these losses is not that big.

As you can see, having huge revenue is not all roses.

The problem isn't huge revenue, but huge expenses and huge debt.

Huge revenue + low profit margins = Huge expenses + low profit margins

Yeah I could have explained it from the expenses side, but strictly speaking it's equivalent.

And very low margins.