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[LJ11]

Corporations do not risk a backlash from stockholders and potential SEC investigation by being too far off in their estimates. And if they end up being far too short, they have to be able to justify how they came up with these numbers in the first place and “I thought a fairy will convince everybody in their sleep to buy our system” will not cut it.

So if Sony is off by lets say 3m (I'm being really generous), sold through to consumers, would that be a lot? It would be in my eyes, and the SEC wouldn't bat an eye. Happens all the time.

Edit: Like DC said, the market will punish you for bad forecasts. It will punish you months before the missed numbers are even announced if they think you have no shot in hell in meeting your targets.

 

[HyperionX]

How funny. Sony will find it easier to reach 11m in sold than shipped this fiscal year. They get to subtract their 2m over-shipment from Q4, so it's only ~9.5-10m they need to ship, assuming they keep their inventories small.

 

[Gadfly]

So if Sony is off by lets say 3m (I'm being really generous), sold through to consumers, would that be a lot? It would be in my eyes, and the SEC wouldn't bat an eye. Happens all the time.

Edit: Like DC said, the market will punish you for bad forecasts. It will punish you months before the missed numbers are even announced if they think you have no shot in hell in meeting your targets.

I would say 3m in this case is on the border. if they are off by 5-6 m they can lose more than investor's confidence. Like I said, there is a difference between being overly optimistic when you have not shipped the product yet. it's another thing to do it now. My guess is that even if they are off, it will not be by much. I think they know something we don't or we are underestimating its effect on the sales.

 

[DCharlie]

My guess is that even if they are off, it will not be by much. I think they know something we don't or we are underestimating its effect on the sales.

or there is a really funky sony definition of "product sale"

 

[Uncooked]

Looks like Sony is giving away free PS3's!

 

[Stop It]

or there is a really funky sony definition of "product sale"

At Sony "Sold" means "Thought about selling"..

Going by that they'll storm through 11mil, seriously though, either Sony are going to pull a miracle, or next year they'll be in the dock for misleading shareholders, over 10mil WW in 3 quarters? when they sold barely 700,000 in Q1? not a chance in hell, 6mil tops.

 

[Elios83]

It seems like Sony is really preparing for the holyday season to make a big splash with PS3 sales,it's really imortant for them to put PS3 sales back on track by the end of this year.Of course they're planning things we don't know because in the current situation there's no way they can get close to that target and of course it's always about contents and price.
Here's a hint:
http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=SNE:US&sid=aR.8xhWKZ_yQ

Chief Executive Officer Howard Stringer, who projects the games unit will become profitable next fiscal year, may have to further cut prices of the PlayStation 3 to take sales away from Nintendo Co.'s Wii.

PSP is having a great year and the positive trend will continue with the slim&lite model. Shimpents are probably limited to 9 million units because Sony has been clearing the channels for months on the old model, a situation similar to the introduction of PStwo.
Also it's ironic that at the moment every division within Sony is making money except the gaming division which has kept all the ship afloat for a few years.

 

[Kurosaki Ichigo]

Err...so now that its recorded sales...we can't use old LTDs?

http://www.scei.co.jp/corporate/data/bizdataps2_e.html
2006/12/31 115.36 million units (Japan: 24.76 million/ USA: 46.53 million/ Europe: 44.07 million)
2007/03/31 117.89 million units (Japan: 25.42 million/ USA: 47.68 million/ Europe: 44.79 million)

2.53m in Q4 but in that report it says 2.42!

 

[DCharlie]

Chief Executive Officer Howard Stringer, who projects the games unit will become profitable next fiscal year, may have to further cut prices of the PlayStation 3 to take sales away from Nintendo Co.'s Wii.

how is a price cut to the PS3 going to help them catch Wii?

I think that's ignoring the wider issue of what makes the Wii popular and the PS3 and X360 less popular.

A price cut would help, but this leads into what i think is a bigger issue : i think most casual users who haven't taken the plunge yet will be far more interested in the Wii than the PS3/X360. MS's strategy meant they fluked out and have a decent user base on the boards already, but Sony being a little later means they are fairly far behind.

I just think that perhaps sony are underestimating the sort of damage that Nintendo have done - although then again, some killer content is going to help... it's just whether it'll hit the masses in the same way Wii Sports/whatever the hell Nintendo has next.

That said - it's very early in the game - we still haven't got to the big sony hitters yet.... or X360 for that matter (well... Halo)

 

[Jon_Danger]

The ps2 is the ps3's crutch.

Sony needs to spend more time in physical therapy so they can lose the crutch!

 

[arias]

The ps2 is the ps3's crutch.

Sony needs to spend more time in physical therapy so they can lose the crutch!

More like the old man giving its baby boy a lift. PS2 price is going to stay at $129; it's at its 7th or 8th year in the cycle and can bear to wait a year more for $99 price point. As it stands currently, I think Sony can make more than $30 (?) of pure liquid profit from each PS2 unit. This is only good for the PS3.

 

[Nightbringer]

Perhaps I am wrong but from the economic perspective PSP seems more important in the next months cos the new model and the fact they don´t lose money with it than PS3.

Heavenly Sword, Uncharted, Lair, Metal Gear Solid 4 and other games aren´t released yet, if PS3 continues being the third in sales after all these impressive games is when Sony must start to worry because something doesn´t run well with the PS3.

 

[milanbaros]

PS2 up year on year. That is truely incredible. .71m for Q1 and they expect 11m for the year. That is some optimism.

 

[starship]

You're right, you're right. So these numbers are now "shipped to stores" rather than "shipped to warehouse"?

Yeah of course.

Sure, but they've obviously been wrong a time or two in the last year.

Actually they have been wrong 3 times about PSP alone last year. Their original forecast for PSP was 15m, then they revised it to 12m, again another revise to 9m and at the end they couldn't even meet that number.

 

[Rody]

11 million? I'm curious to see how they'll pull this off.

 

[Bearillusion]

11 million? I'm curious to see how they'll pull this off.

I'll be doing my bit to help next week.

 

[Defuser]

11 million? I'm curious to see how they'll pull this off.

Shipped = yes
Sold = HAHAHAHAHA

 

[thorns]

The new number used is still "shipped" or "sold to retailers" (i.e. same number MS and Nintendo use). Before they used the manufactured number.

It's NOT sold to customers.

 

[milanbaros]

The new number used is still "shipped" or "sold to retailers" (i.e. same number MS and Nintendo use). Before they used the manufactured number.

It's NOT sold to customers.

Ah ok. That seems to make a lot more sense. How did they get away with using the manufactured number before? Still, how do they expect retailers to buy 10m PS3s in the next 9 months?

 

[apujanata]

Here's the money stuff for Game section:

Sales and operating revenue

2006 - 122.5 Yen
2007 - 196.6 Yen
Change in Yen - +60.5%

2007 - $1,598 million


operating income (loss)

2006 - (26.8)
2007 - (29.2)

2007 - Loss of $237 million

Sony (whole company) vs microsoft (whole company) vs Nintendo (whole company), March to June 2007 period :

Revenue :
Sony : USD 197 Billion
MS : USD 13.4 Billion
Nintendo : USD 3 Billion

Operating Income :
Sony : USD 9.9 Billion (5% of revenue)
MS : USD 4 Billion (30% of revenue) (after deducted 1 Billion for X360 warranty)
Nintendo : USD 0.9 Billion (30% of Revenue)

Net Income :
Sony : USD 6.6 (3% of Revenue)
MS : USD 3 Billion 22% of revenue)
Nintendo : USD 0.8 Billion (27% of revenue)

Note : I use 1 USD = 100 Yen. I use the inaccurate, but simple (and easy to calculate) exchange rate.

 

[milanbaros]

Sony (whole company) vs microsoft (whole company) vs Nintendo (whole company), March to June 2007 period :

Revenue :
Sony : USD 197 Billion
MS : USD 13.4 Billion
Nintendo : USD 3 Billion

Operating Income :
Sony : USD 9.9 Billion (5% of revenue)
MS : USD 4 Billion (30% of revenue) (after deducted 1 Billion for X360 warranty)
Nintendo : USD 0.9 Billion (30% of Revenue)

Net Income :
Sony : USD 6.6 (3% of Revenue)
MS : USD 3 Billion 22% of revenue)
Nintendo : USD 0.8 Billion (27% of revenue)

Note : I use 1 USD = 100 Yen. I use the inaccurate, but simple (and easy to calculate) exchange rate.

I don't know what the hell that is, but I doubt Sony generates 15x as much revenue as Microsoft lol.

 

[Sapapayo]

Same as you, i don't understand why apujanata has made a complete bullshit post.

Maybe it's a joke.

 

[Kinan]

Same as you, i don't understand why apujanata has made a complete bullshit post.

Maybe it's a joke.

He just missed a comma in all Sony numbers. Its 19.7 in his 100 Yen for 1$ exchange course and 16.069 if you use more or less real rate Correspondingly its 0.8 operating income and 0.54 net income.

 

[Sapapayo]

Even with that :

Sony (whole company) vs microsoft (whole company)

Sony to made more moneys that whole MS WORLDWIDE ? I don't believe that. Sources ?

I read often that MS make a load of money way beyond others companies around the world, so... Sources ?^²

 

[adelante]

Sony (whole company) vs microsoft (whole company) vs Nintendo (whole company), March to June 2007 period :

Revenue :
Sony : USD 197 Billion
MS : USD 13.4 Billion
Nintendo : USD 3 Billion

WUTHA?!?


Fo' real???

 

[Kinan]

Even with that :



Sony to made more moneys that whole MS WORLDWIDE ? I don't believe that. Sources ?

I read often that MS make a load of money way beyond others companies around the world, so... Sources ?^²

Man, people are so lazy these days. Sony data is in OP.

Microsoft data were in corresponding Microsoft thread some time ago :

http://www.neogaf.com/forum/showthread.php?t=172596

REDMOND, Wash., July 19 /PRNewswire-FirstCall/ -- Microsoft Corp. (Nasdaq: MSFT - News) today announced revenue of $13.37 billion for the quarter ended June 30, 2007, a 13% increase over the same period of the prior year. Diluted earnings per share for the quarter were $0.31.

 

[Elios83]

Even with that :



Sony to made more moneys that whole MS WORLDWIDE ? I don't believe that. Sources ?

I read often that MS make a load of money way beyond others companies around the world, so... Sources ?^²

Sony has higher revenues than Microsoft. What's the surprise?They sell a lot of really expensive electronics products and they are a big player in all the entertainment business (movies,music,gaming).
Microsoft makes higher profits than Sony because they have way higher margins on their products since they sell software mainly.

Sony's revenues for this quarter (April/June 2007) were US$16.069 billion
http://www.nasdaq.com//aspxcontent/...DERUSEQUITY_0120.htm&cdtime=07/26/2007+2:24AM

Microsoft's revenues for the same quarter were $13.37 billion:
http://www.microsoft-watch.com/content/corporate/microsoft_q4_2007_by_the_numbers.html

 

[Sapapayo]

Thx.

So, kuddos to sony then

 

[thekad]

Wait, isn't .71 million a little low? I thought they sold that much in Europe alone when they launched...

 

[Kinan]

Wait, isn't .71 million a little low? I thought they sold that much in Europe alone when they launched...

EU launch belongs to previous financial year. Financial Q1 2007 start from April.

 

[thekad]

Thanks.

 

[donny2112]

Looks like we might actually be able to calculate European sales numbers from this, if someone can provide the NA and Japan PS3 sales since April 1.

JoshuaJSlone already did a good job, and here's some more information.

April + May + June:
U.S. + Japan + Canada - 420K
PAL/Other - ~400K (800K by end of March and 1.2 million by E3)

Total: ~820K

By only shipping 0.71 million to retailers, they are obviously trying to clear out stock. They, only in the last year or so, started doing this with PSP.

I am more comfortable with this measure of shipping, since it is now directly comparable to Microsoft and Nintendo's shipping calculations. It does throw a wrench in historical comparisons, though.

 

[methane47]

- How to account for $237 million loss?
..... It's a Q1 loss, and there's only been 0.71m sold.
..... ..... Even if we double production, 237m/1.4m = US$200 loss per unit
..... ..... Which I think is very unlikely
..... Don't forget I didn't take into account the profits made by PSP, PS2 and software
..... ..... So it must mean they are losing A LOT on PS3, maybe upwards of $350million
..... ..... Something is going on with the PS3

You're missing out on some things though. the $237 million loss isn't only from PS3 HARDware costs. It probably also comes out from any development for the PS3.
Notably GG with Killzone's 30+ million budget. Or how about costs coming from advertising, E3, other games, lawsuits (90 million for Immersion).. and tieing up exclusives like FFXIII and MGS4, paying 2nd party devs like Factor 5 blah blah blah..

+ Edge Developement and other engine tools and resources being developed by SONY

You are forgetting to take into consider EVERYthing that has to be done with the Playstation Brand...

Given that this is the product's 1st year you must expect the cost to be very front loaded. Given all that information I was expecting a greater loss than $237 mil

 

[Jokeropia]

Excellent that they're gonna use normal shipped numbers from now on. While it does make comparisons with their old figures a bit troublesome, it will make comparisons with Nintendo and MS much easier.

 

[FrankT]

heres a big change in the report

beginning Q1 FY07 the method of reporting hardware and software sales has been changed from production shipments to recorded sales.

Thats a big ouch for future reports

This is good, comparisons will be much more eaiser. They had a loss of 237 million for the quarter, and need to sale about 10.3 million units for the remaining 3 quarters. Probably not going to happen without further price cuts, but we shall see. I'm wondering if they can turn these losses around and keep them under a billion for the fiscal year which is about what was predicted for there total loss for the year from one major Japanese analyst.

 

[koam]

Sorry I don't have time to read through all of this right now, do we have any hardware sales for the PS3 by region? (or even totals)

 

[tanod]

This is good, comparisons will be much more eaiser. They had a loss of 237 million for the quarter, and need to sale about 10.3 million units for the remaining 3 quarters. Probably not going to happen without further price cuts, but we shall see. I'm wondering if they can turn these losses around and keep them under a billion for the fiscal year which is about what was predicted for there total loss for the year from one major Japanese analyst.

$400 + MGS4 before March 31, 2008 would probably nab a "few" more customers.

Who knows though? *shrugs*

 

[felipeko]

You're missing out on some things though. the $237 million loss isn't only from PS3 HARDware costs. It probably also comes out from any development for the PS3.
Notably GG with Killzone's 30+ million budget. Or how about costs coming from advertising, E3, other games, lawsuits (90 million for Immersion).. and tieing up exclusives like FFXIII and MGS4, paying 2nd party devs like Factor 5 blah blah blah..

+ Edge Developement and other engine tools and resources being developed by SONY

You are forgetting to take into consider EVERYthing that has to be done with the Playstation Brand...

Given that this is the product's 1st year you must expect the cost to be very front loaded. Given all that information I was expecting a greater loss than $237 mil

And you are forgetting about all the profit from PS2 and PSP.

 

[arias]

You're missing out on some things though. the $237 million loss isn't only from PS3 HARDware costs. It probably also comes out from any development for the PS3.
Notably GG with Killzone's 30+ million budget. Or how about costs coming from advertising, E3, other games, lawsuits (90 million for Immersion).. and tieing up exclusives like FFXIII and MGS4, paying 2nd party devs like Factor 5 blah blah blah..

+ Edge Developement and other engine tools and resources being developed by SONY

You are forgetting to take into consider EVERYthing that has to be done with the Playstation Brand...

Given that this is the product's 1st year you must expect the cost to be very front loaded. Given all that information I was expecting a greater loss than $237 mil

Yeah sorry about that, before sleep I thought about the dozen or so big games that were under internal development and that could have added up to the costs. You right. Just want to make it clear that the 90 million payment wasn't doled out this fiscal year, was it? In light of all these though, the loss really seems quite low. We'll see what happens.

 

[ComputerNerd]

And you are forgetting about all the profit from PS2 and PSP.

That's what I was gonna say. It isn't out of the question to guess that the PS3 lost over $350 million last quarter. It was profits from the PS2 and PSP (and software sales) that brought them to $237 million loss for the division.

Now that we have the price drop, I wonder how much that'll hurt the results in Q2. Sony had to compensate the retailers for all the PS3's on the shelves.

 

[Kurosaki Ichigo]

Just read a news bit at bloomberg and Sony TV branch lost more money than gaming branch. Just wow...it seems camera branch was the best this quarter.

 

[Link316]

Now that we have the price drop, I wonder how much that'll hurt the results in Q2. Sony had to compensate the retailers for all the PS3's on the shelves.

it won't, they have reserves set aside for price cuts just like every publisher does

 

[Lightning]

WOW

Sony aren't doing as badly or making as many losses as I thought. PSP and PS2 are really covering for the lagging PS3 quite well.

I am sure that if they can boost sales over the next 6mths that they can reach their 11m target. It is certainly possible and Sony are known to take whatever steps necessary to ensure such goals are met. So this should be an even more interesting holiday period now.

Games like Killzone 2 should provide a decent hardware boost for Sony and hopefully MGS4 can release in February instead of March because that game will greatly help as well for both Konami and Sony.

 

[methane47]

And you are forgetting about all the profit from PS2 and PSP.

Well the person I quoted had already stated that you have to figure in profits from the PS2 and PSP...

So i only stated what he failed to mention in his post...

 

[PistolGrip]

My 2cents on a few things.

PSP and PS2 are flooded in the channel, which explains why sales to retailers will be bigger on the PS3. There are still a lot of coutries PS3s will continue to ship to.

PS3 reaching 11 Mil: They can easily sell to retailers around 6 million units WW on the third quarter (holidays). They need shipments of about 2 mil for each missing quarter (2nd and fourth). The 11 million sold to retailers forecast doesnt seem farfetched if you think about it actually. US and EU sales to customers just in Nov and Dec can total 2-3 million each.

 

[ComputerNerd]

it won't, they have reserves set aside for price cuts just like every publisher does

Well sure they have cash reserves. I'm talking about their Q2 financial report. Won't it show up as an expense in Q2?

 

[Link316]

Well sure they have cash reserves. I'm talking about their Q2 financial report. Won't it show up as an expense in Q2?

nope, you'll just see their reserves go down and that's about it

 

[tanod]

Since they changed their accounting definition of "shipped," that should account for the ginormous increase in inventory.

I'm not sure how that would affect their profits since normally when you write up inventory, it would increase profits. But the PS3 is being sold at a loss, so wouldn't that push profits downward?

Pistolgrip: By now, retailers have a really good handle on exactly what they'll sell in PS2s and PSPs so you'd pretty safe in assuming those units shipped are going to get sold to consumers fairly soon.

The PS3 shipped numbers also reflect this. I'm surprised the 710,000 is as high as it is because if the retail channel is as stuffed as some are assuming, this number would be much much lower, like when the PSP shipped only 10,000 in a quarter earlier this year.

 

[tanod]

Well sure they have cash reserves. I'm talking about their Q2 financial report. Won't it show up as an expense in Q2?

What's all this talk about price cut or cash reserves? You can't record a reserve of the money you're going to lose on products you haven't sold yet. That would be illegal.

Also important distinction:
Accounting reserve: (like MS did) is not cash that's being set aside. It's just a bookkeeping entry. When a company makes a reserve, they are not required to set aside any cash to support that, at all. It would be smart if they did set 'some' aside for that reason, but they are not required to.

Cash reserves: Same as a bank account or cash on hand. The only mention in financial statements of this will be when they are talking about bank accounts. They have nothing to do with accounting or warranty reserves (explained above) and do not have a direct effect on the income statement.

R&D expenditures and expensing of price drops and cost of goods sold:
When the console is launched, almost all the R&D costs were expensed, as per accounting rules. These were recorded in the 3rd and 4th quarter last year with the console launches in the different territories. In recording these costs, they get to expense cash they've already spent.

The only immediate expenses that they would get to record at the moment of the price drop is money given back to retailers for price controls of the units on shelves already. These expenses would show up in the 2nd quarter which is happening right now and we won't get results from until 3 months from now. In recording these, the cash back to retailers and expense happens at the same time.

Every other console that is sold from then on, is sold at it's assigned standard cost and only gets expensed when it is shipped and becomes part of whatever quarter it was sold to retailers.

 

[Link316]

talling about the reserves in their allowances for returns