A financial look at the "console war"... how each is faring
The third calendar quarter has come to a close and with it, some financial statements from Sony, Nintendo, and Microsoft. What does this matter, you ask? Looking at the earnings can really cut through the internet hype, jargon, rumors, and walls of flame and really show you whether or not a company is in trouble (financially). Let's start with the company that's in trouble: Sony.
Sony has reported earnings that have "plummeted 94 percent to $14.4 million because of costs related to its laptop battery recall. But it also reported a $369 million operating loss in its video game business because of start-up costs for the PlayStation 3. Sony's game revenues decreased 20 percent to $1.4 billion from a year ago because of a decline in PlayStation Portable and PlayStation 2 sales, as well as a price cut on the PS2." Ouch! There's also a ton of spare PS3 inventory in Japan (save the blue laser diodes, we imagine) and $3 billion short term and long term debt. They've got $4.7 billion in cash, though, so they're not "under" yet. Should the PS3 fail, Sony will have one hell of a time coming back.
Microsoft, naturally, has a war chest of cash -- $31.4 billion (in gold bullions, too!). Let's talk sales: "sales rose 70 percent in the Entertainment and Devices division, which includes games, to $1.03 billion in the quarter. The division cut its loss from $173 million a year ago to $96 million. Microsoft says it is on target to hit profitability by the fiscal year that ends June 30, 2008." On XBL, there are over 4 million subscribers. Even more good news (for Microsoft, they're probably throwing a $2.3 million party for this) is that the 360 consoles in Japan that come bundled with Blue Dragon have sold out. Yep, all 20 of them (joking, joking).
What of Nintendo? "Nintendo reported sales of $2.5 billion, up 69 percent from a year earlier. Net income was $458.6 million, up from a loss a year ago. Nintendo has $6.6 billion in cash. Nintendo is forecasting sales of $6.2 billion and profits of $843 million for the year ended March 31, 2007." Everything else is pudding -- of course they're selling tons of DS's and GBA's... Nintendo's doing well, as usual (GameCube aside).
