Sony Braces For First Loss In 14 Years

22. January, 2009 PS3 2 comments
article-image

sony_logo_1Sony has revised their fiscal 2008 forecast, revealing an extra loss for the Games Division.

Sony is expected to post their first net loss in 14 years, of 150 billion yen ($1.65 billion/£1.21 billion), for the fiscal year ending 31st March 2009.

The following numbers are merely the companies revised predictions over those announced in October 2008, where they predicted a net profit of 150 billion yen for the company.

What’s to blame? Sony cites the deterioration in the business environment due to the global economic slowdown, in addition to the strength of the Japanese yen against foreign currencies (this is referred to as the “appreciation of the yen.”) It’s important to note, all businesses are suffering, as shown by this Cnet run-down. Other significant costs for Sony. found in Sony’s restructuring plans.

As for the Games Division; Sony expects an extra 30 billion yen loss, which equates to $336 million/£243 million. Depending on Sony’s previous forecast (a previous Games Division forecast is difficult to come by), the overall operating loss could be higher or lower than 30 billion yen. 15 billion yen is due to the strength of the yen, and another 15 billion yen to lower-than-expected sales – despite software sales being up 75% in Japan.

Sony’s revised game console forecasts for 2008 fiscal year stay at 10 million for the PlayStation 3, 15 million PSPs (down from previous forecast of 16 million), and 8 million PlayStation 2s (down from 9 million.) 250 million software sales are predicted for the financial year (down by 8 million.)

As part of its restructuring initiatives, which aims to reduce losses by ¥250 billion, Sony announced that its businesses, including the games division, will see a “headcount reduction.” * Plus, as part of “non-restructuring cost-reduction measures”, Sony plans to implement “significant reduction in marketing, logistics and other general expenses.”

You can find an extract from their forecast (which is subject to change) below:

  • 1. Consolidated sales and operating income for the second half of the fiscal year ending March 31, 2009 are expected to be significantly lower than the October forecast, primarily due to a deterioration in the business environment as a result of the global economic slowdown, the continued appreciation of the yen, the impact from the decline in the Japanese stock market and an increase in expected restructuring charges.
  • 2. The following are factors that contributed to changes in operating income (loss) forecast for each business segment for the second half of the fiscal year, compared to the October forecast.

  • (1) In the Electronics segment, operating income (loss) is expected to be approximately ¥340 billion lower than our earlier forecast. Of this, approximately ¥250 billion is due to a deterioration in the business environment brought on by the slowing global economy and an intensification of price competition, approximately ¥40 billion is due to the impact of the appreciation of the yen, approximately ¥30 billion is due to additional restructuring charges and approximately ¥20 billion is due to a deterioration in equity in net income (loss) of affiliated companies.

  • (2) In the Game segment, operating income (loss) is expected to be lower by approximately ¥30 billion. Of this, approximately ¥15 billion is due to the impact of the appreciation of the yen and approximately ¥15 billion is due to lower-than-expected sales.

  • (3) In the Pictures segment, operating income is expected to be lower by approximately ¥13 billion due to restructuring charges, a decline in revenue as a result of the economic slowdown and the impact of the appreciation of the yen.

  • Sony’s report can be found by following this link and their graphs can be found after this link.

    [UPDATE] – *Gamesindustry.com reports that the Games Division is unlikely to be affected by the headcount reduction. SCEE president David Reeves has reportedly emailed Sony Computer Entertainment staff after the revised forecast, stating that, “as was the case with the previous Sony restructuring announcement this mainly concerns our electronics business.”

    Share Button
    About author

    A Big Shot

    Producer/Mix Engineer/Gamer/Blogger/Sneaker Head/Robot

    View all posts by A Big Shot

    Comments
    1. MOE-GUNZ-JACKSON

      1 / 22 / 2009 11:32 am

      Welp they knew this was going to happen when they made the PS3.

      Like or Dislike: Thumb up 0 Thumb down 0

      Reply

    2. 1 / 22 / 2009 3:28 pm

      Sony plans to implement “significant reduction in marketing, logistics and other general expenses.” WHAT MARKETING!!!!!???!!!!!

      Like or Dislike: Thumb up 0 Thumb down 0

      Reply

    Nickname:

    E-mail:

    Homepage:

    Your comment:

    Add your comment