Sony Takes Massive $2 Billion Third Quarter Loss

Sony Takes Massive $2 Billion Third Quarter Loss

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Floods, PlayStation price cuts, and foreign exchange rates may be to blame for a terrible financial quarter (and year) for Sony.

Despite generating $23 billion in revenue from the period spanning October to December of 2011, Sony has officially posted a financial loss of $2.03 billion. The loss includes a $1.09 billion loss by the company's Consumer Products and Services division, of which PlayStation is a part. Adding this to the losses Sony suffered during the rest of 2011 now puts the company's projected annual loss at about $2.9 billion (the fiscal year ends in March 2012), making this the fourth year in row that it's lost money.

So how did this happen? Sony claimed its sales dropped "significantly" because of floods in Thailand, "deterioration in market conditions in developed countries" and "unfavorable foreign exchange." It also claims that its reduced sales (down nearly 25%) came from the PlayStation 3 price cut, combined with unexpected marketing costs.

Still, 6.5 million PS3s and 66.2 million PS3 games were sold during the disastrous quarter, which account for a hefty percentage of the fiscal year's 12 million total console sales and 129.7 million games. To put that in perspective, the company has sold 62 million PS3s since its release in 2006, and 568.1 million games.

The news comes significantly close to the recent announcement that Kaz Hirai will be replacing Sir Howard Stringer as CEO and president effective April 1 (the first day of the 2012 fiscal annum), and as big of a company as Sony is, the new top banana thinks its gaming division will play a large role in turning things around, stating, "The path we must take is clear: to drive the growth of our core electronics businesses - primarily digital imaging, smart mobile and game; to turn around the television business; and to accelerate the innovation that enables us to create new business domains."

"The foundations are now firmly in place for the new management team and me to fully leverage Sony's diverse electronics product portfolio, in conjunction with our rich entertainment assets and growing array of networked services," he went on to say, "to engage with our customers around the world in new and exciting ways." Hopefully Hirai has more up his sleeve than a Scrabble bag of business-speak if he wants to keep one of the largest electronics companies in the world from posting a loss five years in a row.

Source: Eurogamer

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Wow....that's quite a lot of money right there...
Don't you dare die on me Sony!!

I'm glad they are making huge losses, that's Karmic payback for fucking people over with the PS3.

I find it interesting the massive missteps with the Vita weren't mentioned in the reasons for their losses. That's something that probably should be addressed for those years of loss; two major handheld consoles, the Go and Vita, one of which utterly bombed out the door and the other whose performance as yet could be charitably defined as lackluster.

It probably doesn't help that lost operating capital from the PSN hack, plus the cost of PR, fixing the problem, and more than likely the cost of the make-good freebies were all bundled into the overall costs of the year, raising the loss exponentially in spite of other factors. Even for a digital product, you gotta calculate in the loss of sales for that sort of make-good, since that is definatively customers with interest who now no longer will purchase that product because... well, because you gave it away for free. And all those mea culpas add up.

Here's hoping Kaz can right the boat a bit, and this year turns out better for them. I don't begrudge any game company, and can only hope Sony gets itself together sooner rather than later.

And this is why selling a console at a loss is such a fucking stupid idea.

By any normal definition, selling 6.5 million PS3's in a 3 month period should be a resounding success. The fact that Sony is able to post numbers like that and still lose money shows just how ridiculous the whole situation is becoming. If your business plan isn't able to cope with selling six and a half million consoles in a 3 month period, you need a new fucking business plan.

Mike Kayatta:
a Scrabble bag of business-speak

I do like that phrase. :)

if ps3 cost about 100 euro i would buy, same with vita

I have no sympathy for Sony until they stop trying to shove inferior proprietary memory storage devices down our throats.

This doesn't really come as a surprise. Sony's business model since the release of the PS3 has been questionable at best. And they seem to have repeated the same flawed idea as the PS3 in PS Vita. Though, a lot of large companies have been posting losses as well.

Sony has a habit of overloading things with crap it doesn't need.

The Vita does not need sixaxis, it does not need two touchscreens, if you keep adding unnecessary bits and bobs, you drive up costs.

Who wants to fork out 250 quid for a handheld?

Daystar Clarion:
Who wants to fork out 250 quid for a handheld?

Put a Monster Hunter title on it and i wont even think once about doing so. And when i inevitably wreck the units buttons and sticks, ill buy another one and repeat the process.

Alas there is no Monster Hunter title available on it, so it might not even be a first year buy.

gigastar:

Daystar Clarion:
Who wants to fork out 250 quid for a handheld?

Put a Monster Hunter title on it and i wont even think once about doing so. And when i inevitably wreck the units buttons and sticks, ill buy another one and repeat the process.

Alas there is no Monster Hunter title available on it, so it might not even be a first year buy.

I've actually been saying that since the Vita was announced.

Until there is a MH game announced for it, and then is definately slated for a European release, I will not be picking it up.

Curious neglect of the painful consolations they had to dole out due to that severe security breach from last year, unless that accounts in part for the "unexpected marketing costs".

Either way, I'm glad Sony took a shot to the balls. Maybe this will make them think twice before continuing to fuck their existing customers over more.

...But at the same time, I can imagine that this heavy loss may make them squeeze even harder.
Perhaps this is what he really meant when he said "...engage with our customers around the world in new and exciting ways."

"Bend over."

j-e-f-f-e-r-s:
And this is why selling a console at a loss is such a fucking stupid idea.

By any normal definition, selling 6.5 million PS3's in a 3 month period should be a resounding success. The fact that Sony is able to post numbers like that and still lose money shows just how ridiculous the whole situation is becoming. If your business plan isn't able to cope with selling six and a half million consoles in a 3 month period, you need a new fucking business plan.

Sony's losses have a bit more to do than with just the gaming section. From what I've heard, they're getting killed in the TV department.

Sony's internal management is probably due for a little spit shine.

I figure the PSN hack had more to do with it than the price cut.

Everyone whining that the PSN Hack caused this.

BULL CRAP

The damage from that was minor in the grand scheme. Every game given out for free was $20 and less anyway, and the biggest expense was hiring a new security firm.

The reason for the heavy losses are the Vita, the shutdown for a couple of weeks of the company in Thailand, and the TV division, which has been hemorrhaging money for years.

The RRoD has cost more people more money than the hack, but the hack is trendy to talk about.

>.>
weird, not to long ago i would have cared, but now, meh ...

Methinks a newer, more relevant to real life business strategy is in order. 2 billion dollars is not a small amount of money to be losing.

Well, although some of their decisions regarding their gaming products may have contributed to this disaster(damn you, Vita), it seems to be a problem with Sony as a whole.

Maybe a change in management is for the best, because somebody isn't doing their job properly.

 

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