Sony Financials Spiraling Downward: $2.2 Billion Net Loss This Year

[Karloff]

Sony Financials Spiraling Downward: $2.2 Billion Net Loss This Year

Smartphones are to blame.

Sony [http://www.escapistmagazine.com/news/view/129193-Sony-Financials-Operating-Income-Sinks-By-51], Kaz Hirai promised a long time ago, would return to profitability. Now, for the sixth time in a row, Sony under Kaz Hirai's leadership has forecast a financial loss; but this isn't just any loss. It's a projected net loss of ¥230 billion, or $2.2 billion. Sony always expected to make a loss this financial year, but it anticipated a loss of only ¥50 billion. So what happened to quadruple that figure?

Smartphones [http://www.escapistmagazine.com/news/view/132049-Sony-Q3-2013-Financials-PC-Division-Will-Be-Sold-PS4-Pushes-Income-Up] happened, says Sony, as it cancels its dividend for the year. When Sony elected to sell off its PC division, it said it would concentrate on smartphones and tablets, but of that loss figure, a staggering ¥180 billion ($1.7 billion) can be attributed to its lackluster smartphones division. New Chief Financial Officer Kenichiro Yoshida, who only took up the post earlier this year, now has to wipe the egg off his face and see what he can do to make the figures palatable.

Part of the trouble, at least in the US, is that Sony's smartphone devices are only available via T-Mobile, currently only the fourth ranking carrier in that market. In July, Yoshida warned that the smartphone division could write down losses in its mobile division this year. Projected losses of this magnitude will only strengthen the argument that Sony should selling PS4s [http://www.cnbc.com/id/101885962] and the like.

Source: Reuters [http://www.cnbc.com/id/102007662]


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[MacabreHeart]

It's funny cause the best phone I have ever owned is the Sony Xperia one that I have. It's a great example of a good android phone that isn't made with cheap chinese internals or made by Samsung. Everyone I know with a Sony also really loves the phones. Additionally Cyanogenmod aparently support them well so when Sony turns off the updates there is a well supported custom system that'll work briliantly.

 

[Adam Jensen_v1legacy]

They wanted to get involved in one of the most oversaturated markets. They didn't offer anything that would make their phones stand out from the rest of the crowd. If they wanted to develop smartphones maybe they should have developed just one cheap model for developing countries.

 

[RicoADF]

Unfortunate, the Xperia Z1 and Z2 are great phones, always loved mine. I hope they pull out of it soon.

 

[Aiddon_v1legacy]

going to show that Sony is a far bigger company than just a games one. They REALLY need to step it up in their other divisions because the entertainment and games ones can't make up for everything else's losses.

 

[Dragonbums]

Ouch ouch.

From what I've heard those phones are good? Perhaps they can make them extremely durable and use them as a selling point.

I mean, shit, you'd be surprised how many people would go for that.

 

[NuclearKangaroo]

how weird it is to see sony getting its ass kicked when it comes to electronics

they used to be the king of electronic devices

 

[CrazyBlaze]

If they increased the amount of carriers that would help. I know my mom has a sony (not sure what type) but she really likes it. The only thing she doesn't like is the back cant be removed.

 

[Not Lord Atkin]

so let me get this straight - instead of dropping out of the smartphone market dominated by google, samsung and apple, they drop the Vaio brand? As in the one that actually had some potential as opposed to the bloody xperia that no one even wants in the first place?

 

[fix-the-spade]

So, what's going to happen to Playstation in the next five years if Sony can't turn things around?

It would be bizarre if after all that noise about Microsoft dropping Xbox it ends with Sony being the ones forced to spin off Playstation (or if Playstation is the only thing worth picking up when the vultures circle).

 

[The White Hunter]

The problems are deep at Sony. I can't say I've bought anything Sony that isn't playstation in years. The TV's are too pricey for what you get, their audio equipment is likewise poor bang for buck, the phones whilst nice suffer from a problem I have with many high end phones: big cost justified by crap I don't care about. Quite sad as whenever I've had Sony things they're very nice.

Except the PS1 that has to be turned upside down all the time.

Odd though, that M$ can throw almost what Sony lost this year at buying a dev studio and a brand, and telling of the long term. Provided of course Windows 9 doesn't blow chunks.

 

[qwagor]

What happened to Sony is South Korea. Used to be everything electronic in my house was Sony, now (with the exeption of PS) all of it is Samsung (TV, AC, phone) or LG (Blu-ray, microwave, monitor) which offer Sony level of quality but much cheaper.

 

[Casual Shinji]

they used to be the king of electronic devices

That's the problem with kings, they rest on their laurels. Just look at what happened at the start of the PS3.

At this point Sony is too big to turn things around, yet too big to just snuff out. It remains interesting to see where this money-hemorrhaging giant is going to end up.

 

[SonOfVoorhees]

Alot more competition making better products that are cheaper than Sony. They have always made over priced goods. Their phone are quite good but the phone market is over crowded and its hard for any company to make money if your not Apple. Its the reason why the PS4 is just like the PS3 but more powerful - they couldnt risk bringing out something different as they would be in even more debt.

I think if they have more problems they will just offload more things. Soon it will just be PS4, game developing and Spiderman movies.

 

[Albino Boo]

Lets put this in bit of perspective, this loss represents 3% of turnover. Its nowhere near fatal for the company, it only needs an upswing of 7% for profits to be where you expect for business of this kind.

 

[J Tyran]

Ouch ouch.

From what I've heard those phones are good?

They are, if you where you to make a sensible list of the type five flagship handsets the Xperia Z2 would be in it. The argument could be made that its one of the top three Android handsets along with the HTC One M8 and either the LG G3 or Galaxy S3, they are just not selling.

 

[Casual Shinji]

Its the reason why the PS4 is just like the PS3 but more powerful - they couldnt risk bringing out something different as they would be in even more debt.

I'd argue against that since the gaming division seems to be the only place where they actually learned their lesson a bit. They made a system that's easier to develop for -- none of this Cell architecture -- and doesn't cost (as much of) a shitton of money at launch. They sold the systems practically on 'Look, we're not as much of a shitbag this time around'.

And seriously, what next-gen console isn't just the last system, but more powerful (apart from the Wii)?

 

[Riff Moonraker]

So, what's going to happen to Playstation in the next five years if Sony can't turn things around?

It would be bizarre if after all that noise about Microsoft dropping Xbox it ends with Sony being the ones forced to spin off Playstation (or if Playstation is the only thing worth picking up when the vultures circle).

Nah, I think Sony if they collapse will at least die near the end of the gaming generation, just in time for Microsoft to shut their gaming division down like will obviously happen. If that happens, thats console gaming dead right there. Because all you got left is the Nintendo and their scummy console practices will keep me away forever.

I just cannot agree on this. I simply do not see the consoles going away. Neither Playstation or Xbox... and I cannot fathom why people think this is going to happen. SOMEONE would pick up the Playstation brand if Sony went under, as its obviously hugely successful. The Xbox brand isnt going anywhere, either, as it is way more popular than alot of people want to give it credit for, its just overshadowed by the even larger success of the PS4. Plus, I read that Microsoft has a RESERVE of something to the tune of 70-80 BILLION, just sitting there for a rainy day. They have it in their minds that the Xbox is here to stay, and unless THEY decide otherwise, it will.

I switched over from the PC to consoles looooong ago, but ultimately, I started on a console. The Atari 2600, followed by the NES were my first consoles. I feel reasonably sure that the numbers of people that prefer consoles are staggering, and wont be going anywhere anytime soon.

 

[Sanunes]

Lets put this in bit of perspective, this loss represents 3% of turnover. Its nowhere near fatal for the company, it only needs an upswing of 7% for profits to be where you expect for business of this kind.

I don't think its fatal for the company, but I do think it might be the end for the leadership for it seems they are making poor choices all over the place. I do agree with that they seem to have gotten it right with the PS4 on development, but if Sony goes back into the black I wonder if they are going to learn from these mistakes or be doomed to repeat the PS3.