Sony posts $1b loss, first in 14 years

Here's the good news: Sony's ¥98.9b ($1.03b) loss is slightly less than the $1.1b the company told us it would lose in January. Sadly, all of the other news is bad, starting with the fact that the company just lost a freaking billion dollars, its first loss in 14 years, and it's predicting a similar $1.1b loss next year. Electronics sales were down 17 percent, the Sony-Ericsson phone partnership is struggling, and game division sales dropped 18 percent primarily due to Sony's continued reliance on falling PS2 sales. As for the PS3, it's actually a dim bright spot: hardware cost reductions and increased game sales slightly stemmed the tide, but Sony's still expecting the division to lose money in the coming year. Sony also says it has "extensive measures" in store to try and turn things around after that, so we're hoping Sir Howard's plans to embrace open formats and listen to consumers are kicking into gear, but we'll see.

Read - Sony financials [Warning: PDF]
Read - Reuters report
Read - MarketWatch

[Alex @ May 14th 2009 11:26AM]

That's what you get for overcharging, regardless of the recession. Hopefully you learned your lesson and will revamp things. Maintain the style and quality, but make it lighter on our wallets please! :-D

[whowhatme @ May 14th 2009 11:41AM]

oh, is that how apple got their 1.6B profit, by not overcharging? sony needs to deal with some major issues and start innovating again methinks.

[Sektor @ May 14th 2009 11:52AM]

I laugh at the failure of Japanese companies.
Go Samsung!

[HyDeph @ May 14th 2009 11:53AM]

I lol'd too

[nerdtalker @ May 14th 2009 11:59AM]

::sucking of air through teeth::

We're gonna need you to come in on Sunday, as well... We lost some people this week, need to play catch-up, hokay? All-right! Thaaanks.

[crescentdavid @ May 14th 2009 12:01PM]

I'd have to agree with "whowhatme." Apple's success is more indicative of a successful business model and shrewd product line than low prices. Besides, Sony's NS series is in the ballpark of affordable notebooks. But their line of laptops is stale. It hasn't been refreshed in quite awhile and whatever innovations it made have been matched or surpassed by other companies. Plus their Playstation, Sony Ericsson & movie losses must be killing them.

[darkmax @ May 14th 2009 12:38PM]

Alex, I could not agree more with you on this. I think Sony should go back to its roots in the 70s and 80s, and redo their marketing and pricing. Those fat old CEOs in Sony should all be given their vote of no confidence... and while they are at it, fire the pricing department as well.

[OneLove @ May 14th 2009 12:55PM]

I agree. I love sony products, but they cant keep doing "business" as usual with those over priced products. (Why does everything turn into an apple debate, WTF?)

[Lazarpandar @ May 14th 2009 1:46PM]

Downranked for annoying smiley.

[Hackettman @ May 14th 2009 2:11PM]

You know I wouldnt mind the high price tag so much if it werent for the slow to non existent innovation. Its not all about power and speed......

[Chuckles McGee @ May 14th 2009 2:21PM]

Sony used to be a high priced innovative company that made some top of the line, successful products. Now they make high priced, proprietary format products which just don't cut it.

TVs: Panasonic and others have eclipsed most of the Sony TV line in quality at a fraction of the price
PCs: Apple, Lenovo, and Dell all offer up comparable products at similiar or lower prices.
Music: The Walkman used to be a household name way back when. Apple's pwnerated.
Video games: Touchy subject, but we can all agree it's not a money maker now for Sony.
other products: limited by proprietary formats. always pricey.

[NineT9 @ May 14th 2009 3:06PM]

wow some people hate Sony...

I have no complaints about any sony product I own (TV, Laptop, PS3, etc)
Sure I paid a pretty penny, but every Sony electronic I own is a lot better then its competition...

Well, except for my Sony Walkman...Cowon makes some pretty sweet MP3 Players

[thinkmore @ May 18th 2009 1:54PM]

hi Alex,

I'm not sure they're overcharging for what one gets - Sony has a long tradition of engineering excellence, and the way they do things costs more - which does get passed on to the consumer some of the time. As a former Sony person, I’m sorry to see / hear about the less-than-enviable financial status of the company. Clearly, this is a passing phase which we will all be glad to see the end of - in the interim, this is probably as good a time as any to revisit some of the highlights of Sony Design :
http://thinkmoreinc.wordpress.com/2009/05/17/81/

[PoisonWolf @ May 14th 2009 11:27AM]

One of the fascinating thing about economics and finance that never ceases to amaze me (and puzzle me) is that how financial entities can continue to exist year after year despite losing hundreds and millions of dollars! (Economics is not my forte).

Cheers!

[Jay @ May 14th 2009 11:35AM]

Well looking at the chart, they've made more than they lost, so if anything they have a couple of years left.

[lasean @ May 14th 2009 11:39AM]

@PoisonWolf - They have over $5BN (USD) in the bank and the ability to raise debt (corporate bonds). That gives them a lot of runway (maybe too much) to get things back on track.

[PoisonWolf @ May 14th 2009 11:49AM]

Thanks guys, I appreciate it. I thought the previous profit would have been given out to investors, used in RnD, etc etc.

[Stephen Lang @ May 14th 2009 12:01PM]

Income statements already take into account R&D costs.

Most stocks don't issue dividends these days, that's not what drives stock investment. Investors are hoping to make money on increase in the stock price. So rather than give out profits, the money goes back into the company for re-investment or saving for a rainy day (or year).

[Oli D @ May 14th 2009 2:31PM]

Imagine this,

your climbing a long flight of stairs,

for a few years people like you so they help you up, then as soon as they have lost all their help trying get to grips with the global help recession caused by the irresponsible lending and borrowing of help from large help based companies, they stop helping you, and actually start being agressive and hacking at your shins in an unhelpful way.

You fall down a few steps, but you get up after a while with the help of people helping with their hard earned help. If you carry on falling down the stairs (because no one is heping you) you will eventually have to liquidize, which means all of YOUR help will help go towards someone who helpers have been helpings pension.


Simples.

[Sebastian O @ May 14th 2009 11:35AM]

If they just lowered the price of the PS3 it would help them A LOT.

[skyzbig @ May 14th 2009 11:41AM]

How would that help? If they cut the price they lose more money because of manufacturing costs.

Anyway, it's not the PS3 that's the primary problem...as much as some people like to pretend otherwise.

[Grant G @ May 14th 2009 11:41AM]

I don't think they've managed to lower production costs enough to make a profit off of them at their current ridiculous price. You can't make money by selling more of what you're not making a profit on. Then again, if they lowered the cost of a PS3, in return they would sell more games and blu ray movies, so maybe they would come out ahead.

[LordAdmiral @ May 14th 2009 1:53PM]

The PS3 is a perfect storm of fail. The console is too expensive, the media (games and movies) is too expensive, and Sony is losing money on unit sales.

There are a number of plus points for the PS3, especially the PSP integration. But the content and platform-lock down, the proprietary media, etc. of the entire system makes it much less lucrative. For example, to take advantage of being able to stream movies to your PSP, you need a PS3, and vice versa. If Sony opened up so that a PS3 could stream to anything wi-fi capable, or the PSP could receive streams from any streaming media server, it would drive up sales. So would getting rid of UMD and memory stick support, as would adding AVI/MKV in Xvid/H.264 playback and streaming support in both the PS3 and PSP.

Actually it's too late for the PSP. It be better if they made a new portable console product and marketed these features for that instead of trying to correct current perceptions of the PSP.

I'll bet if they made decent, fairly unrestrictive products, people would flock to it. After all, Sony is a well-known brand. But their inability to reconcile their electronics division with their content divisions (music and movies) is utterly destroying them. It's like a snake with two heads in front of a wall, one head trying to go left and the other trying to go right. It'll either keep bumping into the wall or tear itself apart.

[Lars @ May 14th 2009 2:40PM]

"I'll bet if they made decent, fairly unrestrictive products, people would flock to it."

I would have agreed with you in my younger, more naive years. But seeing Apple's success, especially in this economy, makes me disinclined to make such assumptions anymore. Much like running for political offices, the only thing that matters is looks, style, and public perception.

I find it interesting that they had such large profits 2007/2008 yet 2008/2009 is almost a polar opposite. It makes me think they're operating costs are so high because they're engineering a new product line yet to be announced. They're probably also creating a grip of PSPi's for the launch later this year.

[Patriks7 @ May 14th 2009 2:59PM]

"How would that help?"
More units will be sold. If they can hit a good price, they can gain profits.

[crawdad689 @ May 14th 2009 11:36AM]

Yeah - I wonder too how many years of 1billion dollar losses they can sustain before going completely under.

Oh yeah, Sony sucks, and is overpriced. I used to love me some Sony, too. Back in the days where everyone was rockin' Discmen.

[Game_playa @ May 14th 2009 4:23PM]

My Bravia and PS3 beg to differ.

[Jagster @ May 14th 2009 10:22PM]

My car Sony stereo/cd changer, overpriced Sony HT Receiver, and overpriced Sony digital camera all are crap. The car changer failed in less than a year or light use, some of the face buttons stopped working on my HT Receiver, and the new digital camera I just bought takes worse pictures than my 6 year old entry-level Canon. I'm done with Sony. They used to be good but for the past decade you do not get what you pay for with them. Dollar-for-dollar, you are better off with almost anyone else, be that at the high-end or the low-end of the price spectrum.

I've replaced my Sony HT Receiver with a Yamaha, I just don't use my CD changer any more (who does anyways), and I'm about to throw the Sony camera at the wall (because the pictures are so poorly focused and noisy) and go get another Canon.

Good luck with your Sony gear Game_playa, but I agree with crawdad689.

[Jagster @ May 14th 2009 10:30PM]

Oh, and by the way Game_playa, your Bravia and PS3 were overpriced. Maybe they work ok, but definately overpriced. In the console world, there's not a lot of competition (only 2 other companies), but as far as TV's go, you could have done better.

[GarJE @ May 14th 2009 11:46AM]

The trouble with all this is that financiers classify a shortfall to a projected level of profit as a loss, so if my company was expected to earn $100 profit and I only make $80, they will call it a $20 loss. Bonkers really when you think about it!

[Stephen Lang @ May 14th 2009 12:04PM]

Actually, no one says it that way. They would just say you made less money than you originally projected.


What can happen is that your stock price may drop. And that's because people were buying your stock anticipating you were going to report a profit of $100. So when you actually report less profit, the stock drops a bit.

[strider_mt2k @ May 14th 2009 11:48AM]

Bad PSP firmware karma catching up with 'em.

Loosen that stuff up and it'll all turn around, Sorny.

[ChillyCat @ May 14th 2009 12:03PM]

Yeah...that's it. PSP firmware.

Maybe once you've entered Junior High School, you'll get a better
grasp on economics for 13 year olds.

[strider_mt2k @ May 14th 2009 12:38PM]

OOOh, such vitriol.
I'm sure you'll beat me up at recess.

I don't know what's more pathetic, your bizarre anger or the thought that you took my comment seriously.
I'm calling it a tie from here, personally.

[Oli D @ May 14th 2009 2:57PM]

i found his strange anger amusing

[hexydes @ May 14th 2009 11:52AM]

Hmm, perhaps paying the movie studios a few hundred million dollars to abandon HD-DVD support isn't working out quite as Sony would have liked...

[crawdad689 @ May 14th 2009 11:59AM]

those $25 blu-ray titles aren't helping either

[Banman @ May 14th 2009 1:49PM]

I'm pretty sure the Blu-ray adoption rate on the consumer level has been on the upswing.

[Gameboy2k @ May 14th 2009 12:01PM]

Looks like Phony needs to get it's act together. I've invested in their items for several years. Learn some lessons from IBM and listen to the people, instead of dictating what you "Think" will work.

[teedoubleyou @ May 14th 2009 12:02PM]

It startles me how many of you assume this is strongly connected to the PS3, AND that if Sony went under it would be a good thing. How would that be a good thing?

Sure we all like to see the Big Dog lose out, and we're all little commies at heart, but realistically we all own a Sony product somewhere. TVs, DVD Players, MP3 players, Digital Cameras.. the list goes on. Not to mention that as expensive as it is, the PS3 is awesome.

No doubt there are alternatives to Sony but this is nothing but bad news.

[Jon Acheson @ May 14th 2009 12:38PM]

Agree on the awesomeness of the PS3, at least my 1st Gen 60.

Sony's real problem is that they aren't even a player in a lot of markets they used to dominate. They are almost a non-entity in the MP3 player marketplace, for instance, whereas they were on top of the world in the CD era. They gave up making PDAs. Their cameras and computers and HDTVs are nothing special.

Sony Pictures seems to be struggling, too, apart from Quantum of Solace.

SCEA is probably one of their better divisions, right now.

[ddub @ May 14th 2009 1:39PM]

ps3 is a major part of the Sony business model. in years past they realied heavily on their number seller, the ps2. Ps3 was meant to fill that slot. It hasn't and that is a major blow to their bottom line. They have losses in other lines. But PS3 was always intended to be their best most profitable product.

[eprn17 @ May 14th 2009 3:49PM]

I don't own any Sony products.

[Semi @ May 14th 2009 12:11PM]

finally sony feels the pain of fake release dates...

[jwilson02 @ May 14th 2009 12:31PM]

The cross elasticity of demand for PS3 I assume is positive. I'm willing to bet the reason for this is due to the availability of a substitute product like the Xbox360. I cant comment on the price elasticity but we can probably assume its elastic and the demand picks up with a price decrease. That being said, Sony certainly has researched the hotspot for pricing its PS3 that will net it the most income. Should they price it lower, demand will pick up, but not enough to offset the higher variable costs associated with the increase. I'd like to see the contribution on these bad boys but honestly, if these were not priced right, there is something seriously wrong at SONY that is more important that weak sales.

[anon @ May 14th 2009 12:33PM]

Please, please tell me the share price axis is on the right Y axis and not the left.

[bandigolo @ May 14th 2009 12:37PM]

Oh wah. I think they'll survive. In case you can't read, 2007/8 was off the fucking charts.

[Oli D @ May 14th 2009 2:24PM]

Well, it was still on the chart.

Accountants rarely adjust the scale to allow for that kind of mishap, they are really very proficient in that area.

[adam998 @ May 14th 2009 12:39PM]

Samsung is new Sony. Sony is so bloated they can't do anything right anymore. Samsung on the other hand, they are focused. Hack, I haven't touch Sony products for years now. Sony is so 1980s...

[elBravo @ May 14th 2009 12:47PM]

Yea, I don't think BluRay has helped Sony. It seems too early for the tech which might even never reach the fruition of DVD. For the majority of people, there is no reason to go Blu. Most listen to the audio through TV speakers, and for those that don't, normal DVD delivered 5.1dd would be enough. Only a few would want/need the high bitrate 7.1 master DTS stuff. Also, I would image most people don't sit close enough to their hdtv's to touch them. So distance coupled with the surprising quality of upconversion negate some of the benefits of true 1080/24p.
And now with VOD services nipping on the other end of the tech spectrum, BluRay might be pulled apart from both low and high tech before it has much a change to gain ground.