Sony to Combine International Distribution Operations (Update1)

By Pavel Alpeyev and Yoshinori Eki

Dec. 28 (Bloomberg) -- Sony Corp. plans to consolidate its international distribution operations with those of its video- games unit this fiscal year to reduce overlapping costs.

The Tokyo-based company and Sony Computer Entertainment Inc., which sells PlayStation 3 software and hardware, will combine distribution routes and jointly bid for contracts, spokeswoman Mami Imada said, confirming an earlier report by the Nikkei newspaper. Imada declined to give specific figures on the estimated savings.

The cost of distributing products for the group will probably rise 50 percent next fiscal year, after falling 25 percent to 150 billion yen ($1.6 billion) in the 12 months to March 31, Imada said.

Sony, forecasting its second annual loss, eliminated about 20,000 jobs and is cutting 330 billion yen in costs to bring its TV and game units back to profitability in the year ending March 2011. The company is targeting a 5 percent operating margin, the percentage of sales left after deducting the cost of goods sold and administrative expenses, by March 2013, it said in November.

Sony rose 1.5 percent to 2,715 yen as of 10:36 a.m. on the Tokyo Stock Exchange, compared with a 1 percent gain in the benchmark Nikkei 225 Stock Average.

Sony has been predicting it's game business is about to turn profitable next year this entire generation. Doesn't seem very realistic and they have missed every time.

they predict it and they would be correct, if they didn't continue to cut the prices and kill their chance at profitability every single time. A $400 PS3 would actually be netting them a small profit compared to a loss.

Even at $299 they'd of been profitable if not for the ridiculous strength of the yen

Anyway this makes sense.

That and the strong yen might be the reason why they keep missing their target. However, the fact remains they have been predicting profit for the gaming division every year this gen and they missed it every time. Shouldn't they revise the target or consider those factors when they made the estimation? Otherwise, it would like "if everything happens as we forcast, we would make a profit. There can't be any surprises."

Certainly there might be reason for them to predict profit (in some way, good for stocks I guess) and I guess the backlash is ever that serious when they never hit the target.

in 08 they predicted to be profitable in 09 but then didnt they do a revision and change their prediction to 2010. 

Did you miss the financial meltdown of the economy?.

they changed it to 2011

Well whenever I just hopes Sony is able to make 5 billion profit to cover that 3-4 billion dollar debt.

Link for this please? I never knew this.