Sony Beats Q3 Expectations; Game Losses Mount

RC Cola · Jan 30, 2007

http://www.gamasutra.com/php-bin/news_index.php?story=12584

Despite analyst predictions that Sony’s third quarter profits could fall by as much as 50 percent, the company has beaten its own profit estimates and raised its annual forecasts, even as the game division continues to suffer from the expense of the PlayStation 3 launch.

As a whole Sony Group saw consolidated sales and operating revenues of ¥2.61 trillion ($21.42bn), up 9.8 percent on the previous year. Net income did fall to ¥159.9 billion ($1.31bn), but only by 5.3 percent rather than the 50 percent suggested only yesterday by a group of five separate analysts polled by Bloomberg. The analysts had suggested a net income figure of ¥84.1 billion ($0.69bn) on revenues of ¥3 trillion ($24.63bn).

The results for Sony’s game division were less positive, with sales up only 5.6 percent to ¥442.8 billion ($3.63bn), despite the launch of the PlayStation 3. The division reported an operating loss of ¥54.2 billion ($0.44bn), compared to a profit of ¥67.8 billion ($0.56bn) at the same time last year, as a result of manufacturing and marketing costs associated with the North American and Japanese launches.

The company again stated that 2 million units of the PlayStation 3 had been shipped in the two months after launch, making it he fastest selling PlayStation platform so far. The exact total for the third quarter was put at 1.84 million consoles sold – 0.81 million in Japan and 1.03 million in North America. By comparison the PlayStation 2 sold 4.11 million units during the period, down by 23 percent on the same time last year. The PSP saw sales drop even further, by 72 percent, to 1.76 million in total.

A new worldwide total for PlayStation 2 global sales was given as 115.36 million, with 24.76 million sold in Japan, 46.53 million in North America and 44.07 million in the rest of the world. The PSP’s worldwide userbase is put at 24.70 million by Sony, with 6.23 million sold in Japan, 9.58 million in North America and 8.89 million in the rest of the world.

Software sales for the third quarter were down by 16 percent for the PlayStation 2 at 78 million, with PSP sales up by 24 percent to 21.2 million. Initial software sales for the PlayStation 3 were put at 5.2 million.

The company’s core electronics business saw operating income rise by 102.8 percent thanks to better than expected sales of the Bravia range of high end televisions and Cybershot cameras. Sony Pictures saw a profit of ¥26.2 billion ($215m), up from a small loss last year, while the group’s financial services division saw profits fall by 45.9 percent.

Not only did Sony beat expectations but the company also raised its profit forecasts for the full year ended March 31st, from ¥80 billion ($0.66bn) to ¥110 billion ($0.90bn).
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I might comment more on this later when I look into it some more.

For reference, here are the latest numbers from Microsoft and Nintendo:
http://bbs.clutchfans.net/showthread.php?t=123740

chow_yun_fat · Jan 30, 2007

Dooooooooooooomed.

RC Cola · Jan 30, 2007

Apparently, mass production of Cell @ 65nm has already begun, which should cut the costs of making the chip by ~40%. Didn't quite expect that to be ready so soon (Xenon CPU in the 360 won't be produced at 65nm until Q3 or so IIRC). Almost makes the launch 2-3 months ago seem stupid, although I guess Sony was pretty much forced to launch at that time. I wonder if RSX and some of the other components will be ready for 65nm any time soon.

Also, SCE management has several plans to boost PSP sales, and that we should "please wait for a new application to be announced for the PSP from SCE." Probably nothing, but interesting to note I guess.

Maybe some more comments later. OT, but I think Amazon sales of PS3s went up 8300% recently for some reason. Not quite sure why there was a sudden boost all of a sudden, especially since it seems like they've been readily available for a while. Maybe a misleading stat.

Lynus302 · Jan 30, 2007

RC Cola said:

Also, SCE management has several plans to boost PSP sales, and that we should "please wait for a new application to be announced for the PSP from SCE." Probably nothing, but interesting to note I guess.
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Not to derail, but am I the only one who doesn't give two sh1ts about handheld gaming? Seriously: I want a big friggin' TV, surround sound, etc. for my favorite time-wasting venture, not some stupid hand-held.

I bought a GBA for a flight to Prague. I either watched movies or read a book while I was on the place. I've played the damn thing exactly once. It was neat for about 5-10 minutes. Complete waste of money (I feel the same re: PSP, DS, etc).

It seems like I'm the only one. People are surprised when I tell them I love games and hate handhelds.

Oh well. [/rant]

Carry on.

RC Cola · Jan 30, 2007

If everyone who played console games also played handheld games, I imagine handheld sales would be much better. So you're definitely not the only one. I'd liken it to a desktop computer vs a laptop. If you have no purpose for a laptop, then there's little point in getting one (especially if you want a big monitor, a lot of power, no battery life hassles, etc.).

Back on topic, in the same article that mentioned Cell being mass produced @ 65nm, it was also stated that one should not expect a price cut on the PS3 for 2-3 years (in Japan). Hopefully that's just because the Japanese already got their price cut.

chow_yun_fat · Jan 30, 2007

Seriously, 65nm cell in ps3's so soon? I feel jipped

When the new one comes out, I'll just give my ps3 to my brother and buy another ps3

Lynus302: I'm not too fond of handhelds either. I rather listen to mp3's on my mp3 player or watch video's on the tiny 1.5 inch screen.

Coach AI · Jan 30, 2007

I love handheld gaming. Less expensive, some really quality titles out there along with an easy way to have a lot of classics and because of the development costs you can have some really unique games that will surprise you.

RC Cola · Jan 30, 2007

chow_yun_fat said:

Seriously, 65nm cell in ps3's so soon? I feel jipped

When the new one comes out, I'll just give my ps3 to my brother and buy another ps3
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I doubt that there will be that much benefit to getting a PS3 with 65nm Cell (or a PS3 with RSX or other components at 65nm for that matter). There could even be some negatives associated with it if Sony got too aggressive in their cost-reduction strategy. Not much different than any other hardware revision I suppose (and the PS3 will see plenty of those I imagine).

This is a bigger deal for Sony than it is consumers...unless you're a consumer that wants a cheaper PS3, and this development leads to a price cut.

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