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Forums - Sony - to answer question if sony lost more in ps3 then ps2 ANSWER INSIDE

DarkNight_DS on 14 May 2009
NJ5 said:
DarkNight_DS said:
NJ5 said:
DarkNight_DS said:

 

I could have swore that there have been reports of Sony borrowing money from the banks.  You don't borrow money unless you need to.  Can someone dig up how much money Sony has in loans from the bank?

It's all here:

http://www.google.com/finance?fstype=bi&q=NYSE:SNE

Long term debt: 685 billion yen ($7.18 billion)

Total debt: 1.2 trillion yen ($12.6 billion)

As of the end of 2008.

 

If last year was the first year they lost money for 14 years.  How bad were the years prior?  I find it hard to understand why all of these companies posting profits have such huge debts when we don't see the losses until just recently.  I'm really scratching my head over the GM issues.  How do they go from making record profits every year until this past year and then go bankrupt?

That's a pretty big hole that Sony is going to need to climb out of.

 

The debt has likely been used to make Sony a bigger company and expensive things like building factories (some of which are being shut down now).

It's just like a person who has a job and was paying a mortgage, not saving much money. If they lose their job, it's pretty likely they'll have to cut a lot of expenses and/or say goodbye to the house.

Companies like Microsoft and Nintendo have zero to little debt and a lot of cash stored away for moments like these. Sony has the opposite.

 

Ok, but if I borrowed 2 billion this year, then that is 2 billion of debt that I've incurred.  Why is the debt not being reported in the financials?  I can't borrow money without going into debt and without having to report my debt to the bank when I want to borrow money.  How can a company borrow money and not report it?

 



Prepare for termination! It is the only logical thing to do, for I am only loyal to Megatron.

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NJ5 on 14 May 2009
DarkNight_DS said:

Ok, but if I borrowed 2 billion this year, then that is 2 billion of debt that I've incurred.  Why is the debt not being reported in the financials?  I can't borrow money without going into debt and without having to report my debt to the bank when I want to borrow money.  How can a company borrow money and not report it?

 

They do report it, but it's not reported as a loss.

The reason is that when you get a loan, you aren't really losing money (except for interest rates). You're adding a liability to your balance sheet ("I owe $1 billion plus interest to the bank"), but you also add an asset ("I have $1 billion more in cash now"). Then these two get added and the effect is nearly zero in terms of profit.

 



My Mario Kart Wii friend code: 2707-1866-0957

DarkNight_DS on 14 May 2009
NJ5 said:
DarkNight_DS said:

Ok, but if I borrowed 2 billion this year, then that is 2 billion of debt that I've incurred.  Why is the debt not being reported in the financials?  I can't borrow money without going into debt and without having to report my debt to the bank when I want to borrow money.  How can a company borrow money and not report it?

 

They do report it, but it's not reported as a loss.

The reason is that when you get a loan, you aren't really losing money (except for interest rates). You're adding a liability to your balance sheet ("I owe $1 billion plus interest to the bank"), but you also add an asset ("I have $1 billion more in cash now"). Then these two get added and the effect is nearly zero in terms of profit.

 

Any guesses as to what Sony has in the bank and what they have in debt in loans?

 



Prepare for termination! It is the only logical thing to do, for I am only loyal to Megatron.

NJ5 on 14 May 2009
DarkNight_DS said:
NJ5 said:
DarkNight_DS said:

Ok, but if I borrowed 2 billion this year, then that is 2 billion of debt that I've incurred.  Why is the debt not being reported in the financials?  I can't borrow money without going into debt and without having to report my debt to the bank when I want to borrow money.  How can a company borrow money and not report it?

 

They do report it, but it's not reported as a loss.

The reason is that when you get a loan, you aren't really losing money (except for interest rates). You're adding a liability to your balance sheet ("I owe $1 billion plus interest to the bank"), but you also add an asset ("I have $1 billion more in cash now"). Then these two get added and the effect is nearly zero in terms of profit.

 

Any guesses as to what Sony has in the bank and what they have in debt in loans?

 

No guesses needed, it's all in the link I pasted before:

http://www.google.com/finance?fstype=bi&q=NYSE:SNE

Look next to "Cash & Equivalents", "Long Term Debt" and "Total Debt".

786 billion yen in cash, 685 billion in long term debt and 1.2 trillion in total debt.

Their financial report has more updated numbers, but I'm lazy now :P

 



My Mario Kart Wii friend code: 2707-1866-0957

Seece on 14 May 2009
NJ5 said:
DarkNight_DS said:
NJ5 said:
DarkNight_DS said:

Ok, but if I borrowed 2 billion this year, then that is 2 billion of debt that I've incurred.  Why is the debt not being reported in the financials?  I can't borrow money without going into debt and without having to report my debt to the bank when I want to borrow money.  How can a company borrow money and not report it?

 

They do report it, but it's not reported as a loss.

The reason is that when you get a loan, you aren't really losing money (except for interest rates). You're adding a liability to your balance sheet ("I owe $1 billion plus interest to the bank"), but you also add an asset ("I have $1 billion more in cash now"). Then these two get added and the effect is nearly zero in terms of profit.

 

Any guesses as to what Sony has in the bank and what they have in debt in loans?

 

No guesses needed, it's all in the link I pasted before:

http://www.google.com/finance?fstype=bi&q=NYSE:SNE

Look next to "Cash & Equivalents", "Long Term Debt" and "Total Debt".

786 billion yen in cash, 685 billion in long term debt and 1.2 trillion in total debt.

Their financial report has more updated numbers, but I'm lazy now :P

 

 

Sony have 1.2 trillion yen debt???



 

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NJ5 on 14 May 2009

@seece: Yeah but that total debt thing probably includes employee pensions and things like that. I guess long term debt is a better indicator of what people usually think of as debt.



My Mario Kart Wii friend code: 2707-1866-0957

gebx on 14 May 2009

$1 Billion isn't a loss...

But!!

The interest payments!!

Every quarterly report, companies will report how much they spent to pay the interest



Proud Member of GAIBoWS (Gamers Against Irrational Bans of Weezy & Squilliam)

                   

coolestguyever on 14 May 2009

ooh so PS3 spent all of PS2's earnings. Ouch! Well it went from -232 to -124 to -58 so at least its getting better. Could it break even or even a small profit in FY 2010??



cleaner475 on 14 May 2009

I'd expect Sony to start being profitable again next year - But I don't think Blu-ray has damaged Sony - It would mean we'd have a very watered down and possibly multiplatform MGS4



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TWRoO on 14 May 2009
axumblade said:
coolestguyever said:
ooh so PS3 spent all of PS2's earnings. Ouch! Well it went from -232 to -124 to -58 so at least its getting better. Could it break even or even a small profit in FY 2010??

I thought it spent all of the PS2's earnings last year...

If you are going to look at it like that, each as seperate consoles, then the PS3 had spent all the PS2 earnings before it released.

By the end of it's first couple of months, the development of the PS3 had already run up costs more than the profit the PS2 has made up to now. (~$3 billion).. but the PS2 profit at the time the PS3 released was less than it is now of course.

-----

I suspect by the end of this FY, because of the slowing PS2 profits, the PS3 will have lost all the money made by PS1 + PS2, but the division as a whole from 1996 to 2010 will be [figuratively] hanging on the PSP.