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Sony Cuts Profit Outlook by 57%

Coinciding with the news that the PS3 is hitting rock-bottom sales figures in Japan, Sony has announced it is cutting its profit forecast by an alarming 57%.

While Sony had previously estimated a ¥470b profit for the period, the firm has made a shocking revision to that figure to account for the strong Yen that is cutting into Japan's export business. Sony's revised operating profit estimates relate to the full year ending in March 2009.

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Fishy Fingers3650d ago (Edited 3650d ago )

The entire corporation or just their gaming division? Sony are much bigger than simply the Playstation brand, if this is the company as a whole trying to blame this on the PS3s recent dip in form is ridiculous.

Eidt: "Sony said in a statement that it now expects an operating profit of ¥200b." Its obviously the entire company then. I imagine this has far more to do with the currect economic climate rather than any single piece of hardware they make.

Nineball21123650d ago

This has much more to do with the global economic downturn rather than any one specific area.

I think the first line of the article is a bit of a non sequitur too.

This sentence, "Coinciding with the news that the PS3 is hitting rock-bottom sales figures in Japan, Sony has announced it is cutting its profit forecast by an alarming 57%", makes it seem like the sales figures in Japan have something to do with a revised profit forecast.

I realize it doesn't specifically say that one is the consequence of the other, but I think it kind of implies that.

Everyone is going to be hit by this downturn.

ultimolu3650d ago

Yeah, this economy is going to hit businesses very hard. It's already destroying jobs and forcing people to sell their homes, etc.

It won't be just Sony feeling the burn right now. :/

It's terrible to see things going the way they are now. The stock market is experiencing a freefall I believe.

TheExecutive3650d ago

I agree 100%. It is also good to see someone on here that has a little training in Logic. It is sorely lacking on N4g.

The PS3 is loosing money but last time i checked its gaming division was still making money.

theKiller3650d ago (Edited 3650d ago )

if u want to understand about the economy collapse then watch this, which did effect the whole world including sony

http://video.google.com/vid...

IdleLeeSiuLung3650d ago

Quote from Article: "Sony has cited its games division as one of the key areas to expect a fall. 'We expect our results to be lower than the July forecast with operating income decreasing by approximately ¥130b, mainly within the Electronics and the Game segments,' the company said."

Meaning game division is likely hit the hardest. This is bad news, because competition is good and if Sony is hit hard and can't reduce prices it won't put enough pressure on MS....

No price cut this Christmas and unlikely any time early next year.

3650d ago
IdleLeeSiuLung3650d ago

I quoted straight from the article, so you should ask if the article is correct? Just read the article...

I'm not sure why fishy is misleading you, because it is clearly stated in the article. Did fishy not read the article?

Since both comments from fishy and nineball2112 came in a short time span and support each other they might even be the same person. Basically a Sony fanboy.... This is just speculation though.

kewlkat0073650d ago

must of not read the article...?/

"Quote from Article: "Sony has cited its games division as one of the key areas to expect a fall. 'We expect our results to be lower than the July forecast with operating income decreasing by approximately ¥130b, mainly within the Electronics and the Game segments,' the company said.""

thewhoopimen3650d ago (Edited 3650d ago )

This isn't necessarily a product of Sony's high pricing. Rather it is also a sign of the devaluation of the US dollar to the Yen.

Right now a US priced PS3 is valued at 399.00 USD = 38,744.09 Yen

A year ago, $399 priced PS3 = 45486 Yen

You are looking at a 6742 Yen loss in profit which translates currently to: $69.42 Dollars

That is a HUGE difference and could easily turn a profitable consumer product like a camera, notebook, camcorder into a loss.

Compound this with the fact that they are trying to sustain sales numbers in the US. So they can't "raise" the price to make up for the difference. Sony, Nintendo, and many other international manufacturers are thus losing money big time. And it isn't even about driving sales. It's about how companies are suffering from the mismanagement our economy.

Thugbot1873650d ago (Edited 3650d ago )

The significance here is that the budgets will get tight all over the company to include the Gaming division of Sony. This will mean you will not see a price drop for sure this quarter and maybe the next. You may see game projects that might be perceived as a risky investment get cancelled or placed on hold. A rush to complete current projects like Home, we can all say Socom more than likely fell under this rush to release (Release use the fund and patch later).

I believe the extra money will go to trying to keep BLU RAY as a relevant disc format, so that they can get the big payout on the investment they have made so far. So expect to see less love coming in the way of the PS3 being able to keep 3rd party exclusives.

I would also expect MS deep pockets to come into play.

thewhoopimen3650d ago

The same principle i showed you about Sony applies to MS as well. They're deep pockets are now alot shallower. Assuming MS's spending power is $100 billion in 2007. That same $100 billion is now effectively worth $85.08 billion dollars in Japan today.

Tarasque3650d ago

This is completely funny, you can misread an article and get a billion agrees, but if you speak the truth you get disagrees. I think Sony fanboys are Bi-Polar...

GiantEnemyCrab3650d ago

Tarasque not sure about bi-polar in denial or in damage control then yes I can agree with that.

%57 cut in forcast is rather large and disturbing. I wonder if MS or Ninty will revise their forcasts?

IdleLeeSiuLung3649d ago (Edited 3649d ago )

I have not done my research there and can't comment, but 57% profit cut is pretty big considering gaming division is one of the "key" area that is like to be hit hard.

This should affect all three manufacturers (MS less since they don't sell as many consoles in Japan) since all consoles are likely manufactured in Asia.

We have to wait and see if any of the 2 other console manufacturers are experiencing the same.

thewhoopimen3649d ago (Edited 3649d ago )

True. I'm more scared about the damage this will do to our existing trade and may lead to rising prices on all foreign daily products that we take for granted. high inflation seems inevitable.

@tarasque The only damage control you need to be worrying about is the one where the US plugs the gaping hole on a sinking ship.

RememberThe3573649d ago

Thank you for your straight economic talk. Post 1.9 depicts exactly what is going on. Sony even said in their quarterly reports that the dollar depreciating against the yen was going to cut into their profits.

My thoughts:
The reason that the gaming division is getting hit so had is purely due to the PS3 and it selling at a loss. The dollar depreciation relative to the yen will add to these losses. The rest of the electronics division will see reduced sales due to the rescission in the U.S. and the economic instability around the rest of the world. This is not a dire situation, this is reality. Companies have to deal with these thing regularly. The PS3 will be fine, same goes for the 360 and the Wii. Even a Ferrari has the drive slow in a snow storm.

deeznuts3649d ago

http://money.cnn.com/2008/1...

I don't know how to post articles. But MS also lowers forecast, and their gaming division revenue has decreased.

dcbronco3649d ago

Are you really comparing an estimate of 4.7 Billion in annual profit dropping down to 2 Billion in annual profit, with 5 billion in second quarter profits dropping down to 4.95 Billion in second quarter profits? Really?

+ Show (16) more repliesLast reply 3649d ago
dro3650d ago

either way they are still getting sh1t loads of money :/

i would be ok with just 1billion yen!!!

Sir_Ken_Kutaragi3650d ago (Edited 3650d ago )

...But it's Worth EVERY PENNY!!! for the enjoyment i get out of my SEXY;)PS3!!! ;-P

It's a FANTASTIC Games Console to own, does so much!!! ;-P

Let's hope Cute Sack-boy helps them out a bit!!!;)
Shame(NOT)no game will save the xBox 360 tho!!! ;-D
(GOD, there is a Lot of Negative SONY/PS3 News about on this site the past few days??? Hmm...wonder why???)

morganfell3650d ago

The story needs to be reported. They did cut estimates but the number is wrong:

http://www.joystiq.com/2008...

ultimolu3650d ago

Yeah...how could it be 57%?

3650d ago
ultimolu3650d ago

God, shut the f*ck up...Sony Douche Force.
This will affect VERY COMPANY, not just Sony.

Dumbass moron.

Pain3650d ago

that Your country is going to Sh!t and u Kids only care if there console loses...how PATHETIC

3650d ago
ultimolu3650d ago (Edited 3650d ago )

...You know what Farce?

Your words are pretty cute.

I'm just going to laugh at them because I can see that you're far from being a decent human being. And before you ramble on about how I insulted you, wah, wah, wah...I only insulted you because you're letting a stupid console war dictate your comments rather than seeing this from a worldwide perspective.

I wonder...who could this multiple account belong to? Someone that hates my guts as much as you do? You know, that's okay. I never asked anyone to like me or to add me...ya know? So if you want to act like that, fine by me.

You're not hurting my feelings at all.

You see...ANYONE WITH HALF AN INCH OF A F*CKING BRAIN could see that this will affect other companies besides Sony. You didn't even read what I said before you rambled on with your pathetic lowlife insults. If I suck Sony's c*ck, then you suck Microsoft's big ass dildo and you get f*cked with it as well.

I never implied nor denied that Sony is not in trouble you ignorant asshole.

Happy gaming.

PS. If you think childish disagrees make you a better person, then you're wrong.

Carry on with the multiple accounts! :D

3650d ago
Dark Collosis3649d ago

I am by no means a big sony fan. In fact i am a huge 360 fan. I do though have a PS1 and PS2 with many many games, and i know that whats bad for sony is bad for GAMING.. THE REASON MS is pushing all these great games out is because of the competition of Sony. Just like i can guarantee all of you if MS wasn't around you would have even LESS games for the PS3. Even the most ignorant of fanboys should realize this...... COMPETITION=GOOD FOR GAMERS

+ Show (7) more repliesLast reply 3649d ago
Aclay3650d ago

As far as Playstation 3 sales dipping in Japan, I think that a lot of people are waiting on those LittleBigPlanet 80GB PS3 bundles and Gran Turismo 5 PS3 bundles that are coming out at the end of the month.

I'm not sure if the 80GB PS3's will be sold at the same price as the old 40GB PS3's in Japan like here in the United States, but if you get twice the storage capacity for literally the same price, that is something that worth waiting a few weeks for and I'm sure a lot of people are doing that.

Lord Shuhei Yoshida3650d ago

Absolutely.The Japanese market is currently excited for the release of the Little Big Planet bundle and are holding out until it arrives.

orakga3650d ago

I really hope you are right.

But really, the article seems to confirm what everybody was speculating when Sony stubbornly announced that the PS3 will not drop in price; that the PS3 sales will suffer.

Sony was in denial for the last two months, but the sales really speak for itself. Yes, the economy is bad, we know that, but the PS3's high price is more at fault than the economy itself. And as for the exchange rate argument, that's just PR talk, because the fact of the matter is, sales are suffering across the entire globe, which means that the exchange rate has no relevance to this.

Ignorant suits.
Greedy execs.
Poor PS3.

Tarasque3650d ago

I have yet to see such articles or pre-order stats, saying that japan is waiting for LBP bundles. Where did you get this info from?

Darkseider3650d ago

This week alone not just Sony but MANY other large profile companies cut profit outlook due to the current state of the economy. I believe that Sony was hoping that their games division would have been stronger to be able to pump up or rather not cut their profit outlook by as much as they have. The holiday season is coming and the bundles are coming as well. Things will get better all around but it's going to take time, not just for Sony but for everyone.

morrelli433650d ago

This is a bit misleading.. I have read somewhere else that this is the forecast for the entire Sony company, not just SCE.. thats a forecast that includes the sales from their Walkman's (what is the plural for Walkman?!!) T.V's earphones.... everything.. but still its not good news for Sony, whatever way you put it..

ultimolu3650d ago

It's not a good sign for any company right now, not just Sony.
I'm rethinking my stance on buying games this year. I think I'm just going to get Mirror's Edge and Prince of Persia for the time being as well as LBP and R2.

Everything else will have to wait until things get better.

GiantEnemyCrab3650d ago

Quote:

"Sony has cited its games division as one of the key areas to expect a fall. 'We expect our results to be lower than the July forecast with operating income decreasing by approximately ¥130b, mainly within the Electronics and the Game segments,' the company said."

It's right in the article that the game division is a key area.

Oner3649d ago

The correct explanation is

"Sony has cited its games division as ***ONE*** of the key areas to expect a fall...mainly within the Electronics and the Game segments"

It is *ONE* of the key areaS ("s" as in inferring plural). Which read properly means there is at least one MORE as said in the full comment. There is way too much "word play" trying to fit misinformed comments being said here, as usual.