Sony is and will continue to take some serious hits and have heavy losses for a while before it can recover.

I don't see Sony going bankrupt. They have, however, some serious management problems since 7 out of 8 years, they missed their profits forecasts.

Most likely scenario in my opinion: Sony has a miserable 2009, PS3 takes another dive: shareholders fire the CEO. After the new management, Sony will announce a restructuring to reduce costs and cut unprofitable business. By end-2010, the economy will start to recover, Sony will walk towards profit and the BR will start o pick up, which will help Sony with the royalties it will collect.

The PS3 will help Sony mostly due to the BR format and not as a gaming platform. The PS brand is still strong but only on the next gen it might return to fight for 1st place.

For everyone saying Sony is not doomed

No one reasonable is arguing that Sony is doomed. Sony will suffer significant losses within their company regardless of whether they're bailed out by any entity. This thread is about speculation of how much or what areas Sony is going to lose divisions, market share or mind share.

Sony has very powerful and rich competitors in much better condition right now. They've got Samsung hitting them on TVs, Microsoft hitting them on home consoles, Nintendo hitting them on portable consoles, all kinds of audio-sellers hitting them on audio.

Like Sony has done since the launch of the PS3, they will need to continue selling assets (Cell production fabs) or divisions (Sony insurance) in order to minimize the damage to their company.

But it will take a brilliant leader and a determined company to truly minimize their losses over the long term.  Will Sony be stronger for it?  In some ways, possibly.  But they'll certainly be in a weaker position relatively to their competitors.

I don't think Sony will cease to exist, its a huge company, in some ways iconic. However I think what wil happen is extreme downsizing. There will have to be significant changes in their business model.

There was a time when Sony was top dog in electronics and their higher price was justified, but now with competition from Samsung and the like its no longer the case.

To ppl complaining that this is a Sony bash, grow up. Sony isn't the only company going through financial problems its a global recession. Since this is a gaming site however, I'd be curious to see the financial reports from third party devs and publishers. I understand some are reporting huge revenue but they seem to be hollering about revenue almost to distract ppl from questioning the main goal which is profits.

Microsoft is often the worst offender here because they usually have the most revenue even though they've generally posted loss after loss in their home entertainment division.  They also wouldn't talk about /their/ revenue but rather they'd talk about the revenue generated by the Xbox brand, including third party sales relating to the Xbox. 

There are two things that matter in this business: (1) profits and (2) install base.  (2) is the case because install base leads to future profits, or potential profits.  And it means that third parties will be interested in your system.

I predicted months ago Nintendo will buy Sony or at least part of it by 2010 :D

Nintendo???? I dont think so, Nintendo, can only buy the gaming division...