there are also big R&D costs in mobile division too, which are "dragging" the results overall.
At the end, Yen will help them the most so they will be able to get a billion or two in operating profits for FY13.
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Sony Q3: Game Operating Income $53M (PS3/PS2 15.6M in 2012)
- Thread starter Parmenides
- Start date
there are also big R&D costs in mobile division too, which are "dragging" the results overall.
At the end, Yen will help them the most so they will be able to get a billion or two in operating profits for FY13.
shinra-bansho
Member
Dumb question: At one point there was a large deferred tax asset that was taken off the books iirc - resulting in an unexpected fiscal loss? At what point can that be put back on the books if at all?
PS3 + PS2 Q4 = 6.8
Called it.
70.2 end of September (previous 6 months including PS2) + 6.8m = 77m.
You are vindicated?
Angelus Errare
Banned
Should I be excited about these numbers?
zomgbbqftw
Banned
From the PS2 sales trend I figure it sold 0.4-0.6m for the quarter, PS3 at 6.2-6.4m for the quarter. The latter will be a bit higher than expected because of subdued shipments in the previous quarter, around 500k of this quarter's PS3 shipment will go towards replenishing the distribution channel. Annual PS3 sales are heading for around 13.5-14m to March 31st.
It is unacceptable that PS3 and Vita shipments are being obfuscated in this manner, investors have a right to know how well or poorly current generation devices are selling as they have a greater influence on the bottom line than previous generation products.
It is unacceptable that PS3 and Vita shipments are being obfuscated in this manner, investors have a right to know how well or poorly current generation devices are selling as they have a greater influence on the bottom line than previous generation products.
zomgbbqftw
Banned
Dumb question: At one point there was a large deferred tax asset that was taken off the books iirc - resulting in an unexpected fiscal loss? At what point can that be put back on the books if at all?
The company needs to be sufficiently profitable by GAAP to take the assets back onto the balance sheet. I expect this will happen in two tranches, some at the end of this year and some at the end of next year.
A lot depends on whether the depreciation of the Yen continues though, as I said earlier, Sony's treasury doesn't seem convinced since they have $1.5bn worth of FX gains undeclared.
R
Rösti
Unconfirmed Member
I missed the first webcast. Was there a Q&A for it or was there only that of the presentation slides? I suppose it could be a separate event, for what purpose would an English version of this have if not for a question answering session.
Anyway, the slow penetration and performance of Vita is worrying, and it's dull that they aren't mentioning any greater means to combat the situation. It's nice to see some improvements in other fields though, especially in mobile. The streamlining of their product segments is also a welcome change though they could ramp up the effort in IP&S.8:00 (EST) Conference Call / Webcast for Overseas Investors
Feb 7, 2013 [Thu] 22:00 - JST (8:00 - EST / 13:00 - GMT) English Only
Dial-in numbers:
 - From the UK: 0808-238-9578 (toll free)
 - From the US: 1-(888)-771-4371 (toll free)
 - From Japan: 0066-338-12340 (toll free)
 - From other areas: +1-(847)-585-4405
Alternative access numbers: AlternativeNumbers
Please dial in 5-10 minutes prior to the start time.
If you have any difficulty connecting to your local number, please call the
conference directly on the US number for international participants:
+1-(847)-585-4405
Confirmation Number: 34044916
Conference Call
The Xbox division made more money than Sony. Not Sony Computer Entertainment. Sony.
Xbox division has lost Microsoft $3 billion dollars in 10 years, not Xbox division, Microsoft.
A lot depends on whether the depreciation of the Yen continues though, as I said earlier, Sony's treasury doesn't seem convinced since they have $1.5bn worth of FX gains undeclared.
i dont think it has to do anything with conviction, Japanese companies love to outperform, and this is a way for them to do so... as we talk, Yen is sliding.
Toyota is similar and they announced this month that they will stop making new factories outside of Japan... which means that they expect Yen to go even lower and make their unused capacity profitable again.
Pachterballs
Banned
dynopia's little campaign is just sad.
zomgbbqftw
Banned
i dont think it has to do anything with conviction, Japanese companies love to outperform, and this is a way for them to do so... as we talk, Yen is sliding.
Toyota is similar and they announced this month that they will stop making new factories outside of Japan... which means that they expect Yen to go even lower and make their unused capacity profitable again.
Oh I know, but both Sony and Toyota are taking a more cautious approach than the rest of Japanese industry. By not declaring their FX gains they wouldn't have to lose them and declare a big loss if the Yen unexpectedly strengthened. If the Yen stays weak and my hunch about the gap they have in the net trade comes good then I think Sony will be set for a better than expected operating profit.
Captain Tuttle
Member
Why would they hide PS3 numbers? Isn't PS3 the best selling console worldwide last year? They bundle them because PS2 numbers are really dwindling down. Pure guesswork, but logical guesswork. I expect next year's report to no longer include the PS2 given the discontinuation of shipments.
They'll start to bundle PS3 and PS4 sales together
Sephiroth503
Member
so , considering ps3 and 360 are really close, any chance to reach Wii LTD anytime for the HD twins?
Well they'll likely continue to sell for a few more years, look at the legs the PS2 had so it seems possible. I would say unlikely though as most new console owners will be jumping onto Orbis and Durango rather than backtracking to the current HD twins. IMO PS3 may come the closest given how Sony tends to distribute to "emerging markets" as they call it.
.It is unacceptable that PS3 and Vita shipments are being obfuscated in this manner, investors have a right to know how well or poorly current generation devices are selling as they have a greater influence on the bottom line than previous generation products.
It still baffles me that Sonny really did it.
zomgbbqftw
Banned
so , considering ps3 and 360 are really close, any chance to reach Wii LTD this year for the HD twins?
PS3 has the best shot since Sony are introducing it to developing markets and there is a likely price cut to $199 coming this year, and a probable final redesign in 2014 to take advantage of 22nm Cell/28nm RSX at which point they could sell it with 32-40GB flash in emerging markets for a decent profit and draw sales away from Wii U.
It should track pretty well with PS2 once it hits $199 and below, especially with Sony entering the next phase of home consoles, concentrating on PS4 and pushing PS3 in emerging markets.
michaelius
Banned
so , considering ps3 and 360 are really close, any chance to reach Wii LTD anytime for the HD twins?
Around 3-4 years.
X360 might not make it if Durango is cheap and has BC.
so , considering ps3 and 360 are really close, any chance to reach Wii LTD anytime for the HD twins?
Both are around 75 million by now, so they´d need another 25 to reach the Wii.
Should be doable with a few pricecuts here and there.
Opus Angelorum
Member
They have to be vague, to a degree. At least they realise the device is in trouble.
I agree however they could have least say something like "We have a strong belief in PSVita and forthcoming announcements/initiatives will restore faith to the consumer".
metalslimer
Member
I agree however they could have least say something like "We have a strong belief in PSVita and forthcoming announcements/initiatives will restore faith to the consumer".
That assumes they are actively doing anything.
1st Course
Member
First they had a forecast of 16m units to be sold by the end of FY12 (PSP + Vita), then they lowered it to 12million, then 10 million, and now 7 million. If they missed yet again I'm afraid that the system (Vita) may really has no future for it.
metalslimer
Member
Is this the first time a video game company has missed a forecast by that much?
First they had a forecast of 16m units to be sold by the end of FY12 (PSP + Vita), then they lowered it to 12million, then 10 million, and now 7 million. If they missed yet again I'm afraid that the system (Vita) may really has no future for it.
Sony should seriously consider discontinuing the Vita if sales don't improve for it by the end of this year. The money could be shifted to the PS4 which has a much better chance of making money for Sony.
zomgbbqftw
Banned
Is this the first time a video game company has missed a forecast by that much?
I think 3DS was pretty bad in its first year, and the Wii was bad in 2011. Nothing quite as bad as Vita though.
I agree however they could have least say something like "We have a strong belief in PSVita and forthcoming announcements/initiatives will restore faith to the consumer".
Maybe they don't have a strong belief in PS Vita.
And Nintendo took pretty drastic action because of it - Nintendo cutting the price so early and hence making a loss on a console is unheard of in recent times. Sony needs to do something like that otherwise they are wasting money on a product that could be better invested elsewhere.
Nintendo is still losing money. Maybe Sony has looked at what they did and decided they can't stomach the losses Nintendo is eating.
I think 3DS was pretty bad in its first year, and the Wii was bad in 2011. Nothing quite as bad as Vita though.
And Nintendo took pretty drastic action because of it - Nintendo cutting the price so early and hence making a loss on a console is unheard of in recent times. Sony needs to do something like that otherwise they are wasting money on a product that could be better invested elsewhere.
What are they supposed to say?
"The following titles are scheduled for release this year:
Please see attached PDF for our marketing materials".
They have to be vague, to a degree. At least they realise the device is in trouble.
Give people something to look forward to.
iamshadowlark
Banned
dynopia's little campaign is just sad.
I didn't realize he had a thread about this. In fact, its a thread about why another thread is wrong. Don't know why he's so invested.
PS3 has the best shot since Sony are introducing it to developing markets and there is a likely price cut to $199 coming this year, and a probable final redesign in 2014 to take advantage of 22nm Cell/28nm RSX at which point they could sell it with 32-40GB flash in emerging markets for a decent profit and draw sales away from Wii U.
It should track pretty well with PS2 once it hits $199 and below, especially with Sony entering the next phase of home consoles, concentrating on PS4 and pushing PS3 in emerging markets.
I think $199 is just way too high price for that. It should be much lower (under $150).
Sammy Samusu
Member
16 > 12 > 10 > 7
Seriously.
Seriously.
Captain Tuttle
Member
16 > 12 > 10 > 7
Seriously.
Pretty bad. Yep
zomgbbqftw
Banned
As I said the market is spooked by the lack of FX gains and continuing net losses after tax. Pre-market Sony are down around 2%.
zomgbbqftw
Banned
I think $199 is just way too high price for that. It should be much lower (under $150).
In 2014 there is a good chance a final redesign will hit such price points if the rumours about 22nm Cell and 28nm RSX are true.
WSJ notes this about foreign exchange:
http://online.wsj.com/article/SB10001424127887324590904578289103990967408.html
http://online.wsj.com/article/SB10001424127887324590904578289103990967408.html
One thing working in Sony's favor is the weak yen. While the company hasn't capitalized much on the yen's depreciation since mid-November because of locked-in exchange rate hedges, the Japanese currency's slide may provide a lift in the coming fiscal year. Each one yen slide against the euro helps to boost Sony's annual operating profit by ¥6 billion.
Sony should seriously consider discontinuing the Vita if sales don't improve for it by the end of this year. The money could be shifted to the PS4 which has a much better chance of making money for Sony.
What money?
Sony launched the Vita at basically a break even price, and that was including R&D subsidization, which is in the past. On a per unit basis they're likely turning a small profit on Vita hardware.
On the software side they have a lost cost port pipeline from PS3 to Vita, so cross play games cost very little extra, likely far less in cost than they make up in sales. The Vita exclusives are almost all being developed by a teams too small/not proven enough to be given an eight figure PS4 budget.
Sony at this point is best served treating the Vita as a slow burn a la Gamecube, which Nintendo made good money on despite it's lack of market penetration. They can keep making first party titles from their "B tier" first parties where a six to seven figure budget is a reasonable risk.
This is how companies like XSEED and Aksys survive, porting games to the U.S. with the knowledge that 50K sales is a "success". Sony has a far easier time doing this since as the first party they don't have any royalties to pay and therefore higher profit margins on a per unit basis.
Consider Uncharted: Golden Abyss. It had moved north of 500K units as of June 2012, when it was still at pretty much full retail MSRP of $49.99. Sony's per unit take on that can be safely estimated in the $35 range. So 500K * $35 per = $17.5M in revenue, for a game that likely cost nowhere near that to make.
Or Hotshots Golf, which moved over 200K units at it's original MSRP of $40, with about a safe estimate of a $25 margin, resulting in $5M in revenue, probably right around the unit's break even cost.
These numbers (From Play Magazine circa June 2012) are not confirmed to include digital distro either, and likely don't since that would only be gathered from Sony who hasn't released sales figures for these games. On digital distro Sony's take on a per game sale skyrockets to nearly the full sale price ($45 for Uncharted, $35 for Hot Shots, before any sales and price cuts).
This model even works for 3rd parties, as Ubisoft (despite not giving real numbers) has stated they've been quite pleased with AC3:Liberation's sales on the Vita. Keeping costs more in line with what PS2 titles cost and avoiding the current generation skyrocketing of development cost is a recipe for success on Vita.
The Vita has a very workable profit model for Sony to work with as it currently stands. The only reason they'll have to end it prematurely is if they deliver a more successful portable device that demands the fabrication lines currently committed to Vita. The new Xperia line might do just that, but until they do the Vita is a worthwhile place holder that keeps factories open, developers working, and a small subset of consumers happy, not to mention generation a strong inroad to the handheld gaming market thanks to being Playstation Mobile compatible.
As I said the market is spooked by the lack of FX gains and continuing net losses after tax. Pre-market Sony are down around 2%.
Seems to me that could just as likely be profit taking. They're up like 60% in 2 months.
WSJ notes this about foreign exchange:
http://online.wsj.com/article/SB10001424127887324590904578289103990967408.html
Also, for those who don't know, only the yen/euro rate affects Sony. They have said in the past that they are dollar-neutral.
Where did you get the 1m PS2 number from? That seems unbelievably high, to be honest and wouldn't make sense if we look at the development of PS2 sales. Is that info hidden somewhere?Stop the damage control, it includes at least 1m PS2's, it didn't drop that much and pretty much all info on sales we have says no to the 77m.
dynopia's little campaign is just sad.
Is it a campaign? Wasn't it a response to some site posting what he obviously considers to be inaccurate info.
I think he comes across as trying to find out what the reality of the situation is.
Do you have a link to accurate numbers?
In 2014 there is a good chance a final redesign will hit such price points if the rumours about 22nm Cell and 28nm RSX are true.
I think that won't be enough (the die shrink alone) and it will be too late. The motherboard also has to be much more simpler. The PS1 was $99 and the PS2 was $129 in the year when the successor launched. The PS3 is so fucking far from that in both price and hardware complexity. The current PS3 consumes as much power as the launch PS2!
zomgbbqftw
Banned
WSJ notes this about foreign exchange:
http://online.wsj.com/article/SB10001424127887324590904578289103990967408.html
Yeah I know. However, they have pegged the Euro at 115 for the current quarter, the current exchange rate is 126, and the futures say 131 on long term trend. If Sony are doing their estimates on 115 and report at an average of 125, it will add 60bn Yen to their operating profit.
jcm - I don't think they are fully dollar neutral, they have locked in a strong dollar until March, after that they should realise a gain on US assets and takings. It will be quite a large gain as well since they are said to have hedged at an average of 81 until the end of the year.
Someone please update this chart! Hugs and kisses for anyone who does it. <3The Xbox division still needs to recover some billions, unlike Sony's division (and would love to have an updated version of the chart btw) :
https://docs.google.com/file/d/0B0DDHjUUE122N1JOajBJb1Vwa2s/edit
Where did you get the 1m PS2 number from? That seems unbelievably high, to be honest and wouldn't make sense if we look at the development of PS2 sales. Is that info hidden somewhere?
FWIW, PS2 sales for Q3 2011 were 0.9M. I highly doubt sales increased this year.
Yeah I know. However, they have pegged the Euro at 115 for the current quarter, the current exchange rate is 126, and the futures say 131 on long term trend. If Sony are doing their estimates on 115 and report at an average of 125, it will add 60bn Yen to their operating profit.
jcm - I don't think they are fully dollar neutral, they have locked in a strong dollar until March, after that they should realise a gain on US assets and takings. It will be quite a large gain as well since they are said to have hedged at an average of 81 until the end of the year.
They said last month they are dollar neutral. Not saying that hasn't changed, but that's what they said.
Hirai said it’s too early to assess the impact of the recent weakening of the yen against the U.S. dollar and euro. A stronger euro helps Sony’s business while yen-dollar fluctuations are neutral to the company, he said.
Either way, if they have a big forex gain and the building sales closes in march they could put up a big number for year.
Someone please update this chart! Hugs and kisses for anyone who does it. <3
That chart includes so much garbage other than gaming. It's not really indicative of gamin performance at all.
zomgbbqftw
Banned
I think that won't be enough (the die shrink alone) and it will be too late. The motherboard also has to be much more simpler. The PS1 was $99 and the PS2 was $129 in the year when the successor launched. The PS3 is so fucking far from that in both price and hardware complexity. The current PS3 consumes as much power as the launch PS2!
In 2014, the supposed plan is to have a stacked Cell+XDR (to remove the Flex IO shrink constraints) and stacked RSX+GDDR, both on a single package. That would make the PS3 motherboard very simple, and send production costs down below $100.
Kazuma Kiryu
Member
Is it a campaign? Wasn't it a response to some site posting what he obviously considers to be inaccurate info.
I think he comes across as trying to find out what the reality of the situation is.
Do you have a link to accurate numbers?
IDC forecasted 77million, sony shipped what, 76 million? they were off by 1million. and trying to find the reality? give me a break, the guy is in pretty much every thread spinning everything in favor of MS and against Sony.
Psychotext
Member
Xbox division has lost Microsoft $3 billion dollars in 10 years, not Xbox division, Microsoft.
I can't believe people still don't realise how this stuff works when there are so many posters around with a good grasp of finance (and the patience to explain it).
That of course ignoring the fact that the division has never been "just gaming".
Someone please update this chart! Hugs and kisses for anyone who does it. <3
The reason it stopped being updated was because the numbers became meaningless (thanks to Sony merging game into another division for consumer devices and Microsoft including things like Kin and Windows phone in their Entertainment & Devices division).
1st Course
Member
Wow it seem that even Panasonic and Sharp made a profit this quarter, Seems like Japan as whole is up for a resurgence in the upcoming few years.
zomgbbqftw
Banned
They said last month they are dollar neutral. Not saying that hasn't changed, but that's what they said.
Hirai said its too early to assess the impact of the recent weakening of the yen against the U.S. dollar and euro. A stronger euro helps Sonys business while yen-dollar fluctuations are neutral to the company, he said.
Either way, if they have a big forex gain and the building sales closes in march they could put up a big number for year.
Yeah, I think that's until the end of the current year. After that I haven't seen any indication of forwards contracts to lock in a weak dollar after the YE.
Remember they locked in the weak dollar because they managed to trick a bunch of their suppliers into accepting USD payments as opposed to Yen so they wouldn't have to repatriate a weak dollar and lose even more on the FX markets.
What money?
Sony launched the Vita at basically a break even price, and that was including R&D subsidization, which is in the past. On a per unit basis they're likely turning a small profit on Vita hardware.
On the software side they have a lost cost port pipeline from PS3 to Vita, so cross play games cost very little extra, likely far less in cost than they make up in sales. The Vita exclusives are almost all being developed by a teams too small/not proven enough to be given an eight figure PS4 budget.
Sony at this point is best served treating the Vita as a slow burn a la Gamecube, which Nintendo made good money on despite it's lack of market penetration. They can keep making first party titles from their "B tier" first parties where a six to seven figure budget is a reasonable risk.
This is how companies like XSEED and Aksys survive, porting games to the U.S. with the knowledge that 50K sales is a "success". Sony has a far easier time doing this since as the first party they don't have any royalties to pay and therefore higher profit margins on a per unit basis.
Consider Uncharted: Golden Abyss. It had moved north of 500K units as of June 2012, when it was still at pretty much full retail MSRP of $49.99. Sony's per unit take on that can be safely estimated in the $35 range. So 500K * $35 per = $17.5M in revenue, for a game that likely cost nowhere near that to make.
Or Hotshots Golf, which moved over 200K units at it's original MSRP of $40, with about a safe estimate of a $25 margin, resulting in $5M in revenue, probably right around the unit's break even cost.
These numbers (From Play Magazine circa June 2012) are not confirmed to include digital distro either, and likely don't since that would only be gathered from Sony who hasn't released sales figures for these games. On digital distro Sony's take on a per game sale skyrockets to nearly the full sale price ($45 for Uncharted, $35 for Hot Shots, before any sales and price cuts).
This model even works for 3rd parties, as Ubisoft (despite not giving real numbers) has stated they've been quite pleased with AC3:Liberation's sales on the Vita. Keeping costs more in line with what PS2 titles cost and avoiding the current generation skyrocketing of development cost is a recipe for success on Vita.
The Vita has a very workable profit model for Sony to work with as it currently stands. The only reason they'll have to end it prematurely is if they deliver a more successful portable device that demands the fabrication lines currently committed to Vita. The new Xperia line might do just that, but until they do the Vita is a worthwhile place holder that keeps factories open, developers working, and a small subset of consumers happy, not to mention generation a strong inroad to the handheld gaming market thanks to being Playstation Mobile compatible.
Well that's that then. Let's forget Sony has cut the forecasts again for the Vita and 3rd party support is looking non-existent at this point, this was the plan all along and everything is rosy in Vita land.
Yeah, I think that's until the end of the current year. After that I haven't seen any indication of forwards contracts to lock in a weak dollar after the YE.
Remember they locked in the weak dollar because they managed to trick a bunch of their suppliers into accepting USD payments as opposed to Yen so they wouldn't have to repatriate a weak dollar and lose even more on the FX markets.
Fair enough. You have a much better insight into their current business than I do.