Sony in the midst of a huge financial crisis

[Elandyll]

Well, the $1.1 to $1.6 Billion loss already expected since the beginning of the week was already pretty bad, first loss in 14 years, and a huge one at that (compared to about $350million profit in 2007).

The losses were just re-evaluated tonight, and in a press anoucenement by Mr Howard Stringer, it was revealed that the losses would reach a staggering $2.9 to $3.1Billion.

That is a whole $3billion in the RED for 2008.

http://g4tv.com/thefeed/blog/post/69...in-Losses.html

Before we kick this off, I want to give a shout out to Raymond Padilla for giving me yet another negative Sony story to write. He loves throwing me to the fanboys. Now, onto the story:

We already knew Sony was going to post its first operating loss in 14 years and the company expected losses of $1.1 billion. That figure has now been revised to a whopping $2.9 billion. At over 100% more than its original estimate, Sony cites the strong performance of the yen and lowered worldwide demand for its products as the culprits.

As previously mentioned, it looks like Sony will be fast-tracking its planned restructuring, which would cut 16,000 jobs by March 2010. The games division (PlayStation) was also cited for underperformance and is expected to lose $338 million.

This is quite a turn from a little over 10 days ago when the number was $1.1 billion. Oh, and before we go any further, I'm going to remind everyone that although Sony's games division is involved, this is so far from a "LOL PS3 vs. Xbox 360" argument. In fact, the main reason appears to be stalling sales of Sony's BRAVIA line of HD televisions. In fact, Sony will be closing one television plant in Japan, as well as cutting design employees by 30%.

Back on the gaming side... With analysts continually pointing to a price-cut for the PS3, it just may not be possible at this point. Sony doesn't make a profit on the PS3 hardware yet, and probably doesn't want to start losing even more money for each unit sold. This is a dilemma as they definitely need to grow their install base in the U.S., but can't afford the financial hit right now. I don't think we'll be seeing a price cut in April, especially since that's just 1 month after Sony's 2008 fiscal year ends in March.

Anyway, I'm sure you guys will find someway to talk about Killzone 2 (FEBRUARY 27th!!!!!!11!one1!) anyway, but hopefully that got it out of the way. FORE!

Even worse, there is now revelation of internal struggles between the upper management (Mr Stringer in particular) and the engineering, if not in the entirety of Sony's branches.
http://www.smarthouse.com.au/Comment/L9W4U5W4

Will Sony Be Acquired And Is Stringer The Right Leader?
By David Richards

Serious questions are today being asked about the performance of Sir Howard Stringer the Welsh-born former TV journalist who as the CEO and Chairman of Sony has just announced that the Japanese consumer electronics Company will make losses this year of over A$3.8 Billion dollars.
Serious questions are today being asked about the performance of Sir Howard Stringer the Welsh-born former TV journalist who as the CEO and Chairman of Sony has just announced that the Japanese consumer electronics Company will make losses this year of over A$3.8 Billion dollars.

The problem for Stringer is that he is a Westerner in very Japanese Company and although a great many of the shareholders are from the USA and Europe there is still a strong current of support in the Company particularly from the engineering and technology sides for a Japanese CEO.

The loss only strengthens their case say Analysts who believe that Stringer may walk away from the top job at Sony.
On the other hand Sony has not really come up with anything new over the past few years instead Companies like Apple, and even ASUS with their Netbook have taken share away from Sony.

Now Samsung is starting to tear into their LCD TV market share. In Australia the overpriced PS3 Playstation is in third spot behind the Nintendo Wii and the Microsoft Xbox 360.

When Stringer was appointed chairman and CEO of Sony in 2005, he set out to destroy the factions dividing the electronics giant and uncover the synergies needed to grow. However this appears not to be working.

On the other hand when Stringer did take over Sony was an absolute basket case. The Japanese management at the time had misread the boom in flat panel TV's by still trying to push large screen CRT TV's. And when they did move to flat panel TV's they chose Plasma and it was not till 2006 that Sony consolidated behind LCD with the creation of the Bravia brand.
Sony badly needs a stunning new product that screams Sony innovation. They use to have it with the Walkman but that was demolished by Apple who yesterday recorded massive profits from their notebooks, iPods and the 3g iPhone all products that Sony competes against but in a poor way.

Stringer is a very talented man, a dual U.S. and British citizen, was handpicked by his predecessor, Nobuyuki Idei, who was charmed by the Oxford-educated former screenwriter's wit and vision of technology's potential.

At his best when poking fun at himself, Stringer's verbal sparring with Oscar-winning actor Tom Hanks at the Consumer Electronics Show in Las Vegas earlier this month drew applause and laughs from the audience.

However he has failed to deliver a hero product such as a new gaming console that is as much a media centre or home gateway.
In the notebook market they are playing catch up to several Taiwanese Companies such as ASUS with their netbook and a new generation of touch screens.
Where Sony has an edge is with content. While at CBS his former employer Stringer helped boost Dan Rather to the top of U.S. news ratings and lured comedian David Letterman from a rival television network.

He understands the content business but despite this we still don't have a global Sony Content Network that consumers can go to for movie, gaming and other content. It is still coming Sony executives say.

Stringer has also failed to win the hearts of Sony's engineers who appear more intent on playing politics than delivering a hero product. These are the same guys who gave us Sony Robots and me too entertainment products. They are also the same guys who designed the PS that is so expensive to manufacture that it is still costing Sony Billions every year.

All they have to do is look at what Nintendo have done with the Wii. This is a highly profitable product that is selling millions around the world.

"Stringer has not presented a business plan that would convince the engineers to stand behind him," said Yoshihisa Toyosaki, president of IT consultancy J-Star Global and a former Sony employee. "I don't think it will happen now."
"Sony's product line isn't diversified enough," said Fujio Ando, senior managing director at Chibagin Asset Management, who compares the firm unfavourably with rival Sharp with its solar cells and Panasonic with its lithium batteries.
"That's what's frightening about high-tech companies. You need the technology and you need the patents, but most important you need your engineers motivated, if you want future growth," Toyosaki said."Once Sony falls behind with their technology, that's the end of its brand."

Right now there is nothing on the radar for Sony that is going to lead them out of the technology wilderness. What they delivered at the recent CES was nice but not must have.

Their OLED TV offering is expensive as are most of the Sony products. Their notebooks are well built and look good however most of the features are in other notebooks that are cheaper. Gaming is a big problem for the Company due to massive losses from the manufacture of their PS3 gaming console.
Their Camera's are popular but this is a hard category to make money due to competition from the likes of Canon, Panasonic, Nikon and a whole bunch of other players.
So will Stringer survive that is open to debate. The big question is will Sony survive or will someone with a lot of cash on their books come along and buy them.

Now, there is talk that Mr Stringer is actually blaming the "old Sony way" for that debacle, as well as the "worst economic crisis in a lifetime"
http://www.financeasia.com/article.aspx?CIaNID=94663

Frankly, I do hope that despite these horrible numbers, the PS3 gets to have a lower price this spring, and that Sony products go back to the innovation they used to show.
I would just hate a world without Sony, or one where Sony is a hacked subsidiary of Samsung or Vizio.

[Septimus Prime]

Who wrote the second article? That guy writes like a moron.

[joeorc]

I think that Sony will be moving toward a more of an entertainment software media company only.What hardware they do keep will be based on production value DEMAND like Blu-Ray, with more investment in Blu-Ray OPTICAL Disc's production plant's, it seem's to be paying off compared to other part's that seem to be suffering more with other companies producing product's with almost as good Quality with a lower price.

I think Sir. Howard is looking in that direction, and so are the investor's. I can see big cut's in Sony's operation's across the entire company. 160,000 employee's is one of the big problem's. Sony has become too big with the recession being the way it is downsizing is bound to happen. But for the people talking about cutting out part's that make money out of Sony its unlikely, Sony will be needing to make cut's that can hurt them in the long run. I can see
close hardware Production plant's that are way in loss of demand/ and or close and merge more of the production plant's with other's and produce less product.

as for their game's section:

Sony job cuts unlikely to affect games division

Sony Computer Entertainment has told GamesIndustry.biz that the cost cutting measures announced by Sony Corporation today are least likely to affect the games departments.

As detailed this morning, the electronics division is the worst hit of all Sony divisions, with the closure of the manufacturing plant in Ichinomiya in Japan, and a 30 per cent reduction in headcount planned for TV design operations.

A slide from Sony's corporate presentation this morning stated that there are planned headcount reductions for the games, movie and pictures divisions - without going into further detail - and prompting speculation that jobs were to go in videogame departments.

However, Sony Computer Entertainment Europe president David Reeves has informed staff internally that the JPY 250 billion (USD 2.8 billion / EUR 2.1 billion) cost-cutting measures will not include a reduction in games staff, as previously stated last month.

"This is still the case. He has just sent a message to employees here to that effect," said a spokesperson for Sony.

"As was the case with the previous Sony restructuring announcement this mainly concerns our electronics business."

As part of a revised earnings forecast, where Sony now expects a loss of JPY 150 billion (USD 1.68 billion / EUR 1.29 billion) for the financial year ending March 2009, the company's games division is expected to increase losses by approximately JPY 30 billion (USD 337 million / EUR 258 million). Half of that loss is due to adverse currency fluctuations, the other half lower than expected sales, said Sony.

Hardware sales expectations for the year ended March 2009 remain unchanged for the PlayStation 3 – the company still expects to sell 10 million units.

However, Sony has dropped estimates for sales of both the PSP and PlayStation 2 by one million, to 15 million units and 8 million units respectively.

Uncertain economic conditions in emerging markets have hampered sales of the stalwart PlayStation 2, said Sony, while PSP estimates have been reduced to a previous forecast.

http://www.gamesindustry.biz/article...games-division

there is prob. alot of fat to downsize but to cut back on the One part of the company where product price is the main problem. IT is not the demand for the product.