6 million in the Supply chain

[joeorc]

Sony PS3 price cut expected. Sony has mountain of unsold consoles in supply chain.By John Mace - Fri, 04/13/2007 - 07:36.

* Asia
* Technology

Skeptical analysts are still predicting a price cut for the PlayStation 3 this year, even though Sony may be about to reveal encouraging profit forecasts, according to reports from Japan today. Japan's Nikkei newspaper today claimed that Sony is expecting to improve operating profits to $3.35 billion this financial year – the paper did not identify the source of its information.

“We think Sony will find it hard to get through the financial year (which began this month) without cutting the price of the console, and expect further game segment losses of over $1 billion during that period”, commented researchers from leading Japanese investment firm, Nomura, in a private briefing to clients this morning.

PS3 mountainDespite the $1 billion in losses expected this year, and the $2.5 billion reported last year, Nomura's researchers do expect PS3 losses to end in later years, but are uncertain when.

Sony has sold only half of the six million PS3s it has manufactured to date, Nomura estimates. Other sources estimate the number of units shipped out of Sony's factories somewhat lower, at five million, but concur on the sales data.

Sony is expected to increase PS3 shipments to 10 million this financial year, although, as last year's numbers indicate, shipments are far from being an accurate indicator of sales figures.

"In the six months the PS3s was on sale up to March 31 (though for only one month in Europe) it sold 3mn units. To boost that substantially in the fiscal year (which began this month) without lowering prices would in our view need major software hits. We do not see the necessary drawing power in the title pipeline at this point." predicted Nomura analyst Eiichi Katayama. "We expect Sony to take measures to increase market penetration of PS3 hardware, including extending the software lineup, and expect to review our medium-term estimates for the game segment if and when such measures come into view."

Sony claims that it does not plan to reduce the PS3's price for at least two years, according to statements a spokeswoman made to Dow Jones Newswires in February. The company emphasizes that the product is 'a complete package', freeing users from the need to buy add ons.

Nomura is also skeptical about the encouraging profit predictions reported by Nikkei, because of the 10 million PS3's to be shipped, 3 million will actually come from last year's stockpile of already manufactured machines.

If correct, this will have a significant impact on revenues at Sony's semiconductor division, which makes chips for the console, because chip sales for 3 million of this year's PS3 shipments have already been included in last year's revenue figures at the semiconductor division. Nomura estimates the shortfall in chip division sales from this factor at around $170m.

Nikkei's report predicts a huge leap in operating profits for Sony, up to $3.35 billion from $500 million last year. However, Nomura not only casts doubt on the PS3 chip revenues, but also points out that $420 million of this profit increase is attributable to the end of Sony's payouts for exploding laptop PC batteries, and another $250 million to restructuring costs last year.

Nomura's analysts agree that Sony's profits this year will be considerably better than last year, but predict a lower figure of $2.1 billion, due to the PS3 sales and chip revenue issues.

“We think losses in the game segment are temporary and expect its earnings to improve,” Nomura's analysts added. “That said, we think the extent of profit growth in the segment will hinge on how well the PlayStation3 sells at the expected price and the launch of titles for it.”

Note: The Japanese 2008 financial year began April 1, 2007 and will end on March 31, 2008.

April 13: Updated with further comments from Nomura's analysts and Sony comment on price cut

http://texyt.com/Sony+PS3+price+cut+expected+058

selling over half your supply chain in under 6 months..pretty good if i say so my self..


some people are not going to be happy about this....