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Forums - Sales - PS3 production costs decreasing 70%... does that mean it's profitable?

JEDE3 on 23 August 2009
NJ5 said:
JEDE3 said:
NJ5 said:
JEDE3 said:


Ding! If Sony just produced 500k Ps3 slims last Quarter then the Ps3 could easily take up 200million of that 300 million.

I think you misunderstand how financial reporting works.

When a company manufactures a product, two things happen:

1- They pay out cash to buy the components and manufacturing of the product (i.e. subtracting the production cost from their income).

2- They put the finished product in their inventory, assigning it the value at which they'll sell it (to the retailer).

The only way that this results in a financial loss is if the production cost is greater than the price at which they'll sell it to the retailer.

 


i expect to see profit in the gaming division from Holidays on. What you say makes no sense... So they just forget about the money they get after selling their product?

They don't forget about it... as I said in point number 2, the sale value is added to the income as soon as they put it in inventory.

What happens when they sell it to the retailer is that the "inventory value" is converted to hard cash... but if the inventory was correctly calculated, this doesn't result in any income or loss.

Look at it this way. When the PS3 is made, cash is converted to inventory (and the loss or profit occurs here). When the PS3 is sold, inventory is converted to cash (normally without profit or loss at this step).

 

Yes... and they haven't sold the ps3 yet... so they are paying for the inventory and not trading it in for cash... The steps arent complete yet. They haven't done number 2 (lol) yet.



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NJ5 on 23 August 2009
JEDE3 said:

Yes... and they haven't sold the ps3 yet... so they are paying for the inventory and not trading it in for cash... The steps arent complete yet. They haven't done number 2 (lol) yet.

No... that would be number 3 (which I didn't write). Number 1 and 2 happen immediately at production time. The PS3 hardware isn't in limbo while waiting to be sold, it counts towards Sony's assets and income by being added to their inventory.

@Stan85: If it's true that the PS3 cost $840 to make at launch, that was 98,000 yen back then. Now it should cost 29,400 yen plus shipping and controllers and all those things iSuppli didn't count. That's $311 plus the rest (which frankly, I don't know how much it would be).

@Procrastinato: True, the different territories would skew things... that would be hard to calculate though, as the PS3 wasn't even being sold in Europe in 2006.

 



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

Slimebeast on 23 August 2009

I estimate Sony is losing between $50-100 on every PS3 Slim.

But there's nothing wrong with that. They get that money back from periferals and software, overall breaking even on the PS3 business and thus keeping the brand alive and strong in hard times.



JEDE3 on 23 August 2009
Slimebeast said:
I estimate Sony is losing between $50-100 on every PS3 Slim.

But there's nothing wrong with that. They get that money back from periferals and software, overall breaking even on the PS3 business and thus keeping the brand alive and strong in hard times.


no... just no...



Slimebeast on 23 August 2009

JEDE3

Son, let me and NJ5 handle the business analysis. These things are far above your level.



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SamuelRSmith on 23 August 2009
Slimebeast said:
JEDE3

Son, let me and NJ5 handle the business analysis. These things are far above your level.

You never cease to make me laugh.



Xoj on 23 August 2009

hahahah xD i expected this thread from you.
yeah sony its probably loosing money, but a very small amount
also have you slim box? its smaller way smaller, they will save million on shipping.
ps3 will be profitable by a decent amount in 2010



SamuelRSmith on 23 August 2009

I have to ask, do companies pay insurance on goods that they're shipping?

Like, if the boat sinks, would the money Sony would have made just sink to the bottom of the ocean, or can they claim insurance on it?



JEDE3 on 23 August 2009

lol slime - Sony wasn't losing 100 on the phats. They wont go more on the slims. And NJ5 also said sony would only drop the price 50 dollars this year.



Xxain on 23 August 2009
JEDE3 said:
lol slime - Sony wasn't losing 100 on the phats. They wont go more on the slims. And NJ5 also said sony would only drop the price 50 dollars this year.

thats what I dont get...they were losing 40 bucks on Phat soooo how are they losing more on something thats cheaper to make???????