Sony’s Q3 ’09 Conference Calls

Sony were busy yesterday holding conference calls with analysts eager to dissect their Q3 results. The two main events were the one immediately following the results presentation which was primarily for Japanese analysts and the one for “overseas investors” which always seems to mean it is the one for American analysts.  Europe getting the cold shoulder from Sony?  How unusual.

Only kidding, a German analyst did make an appearance in the Question & Answer session following the results presentation.  Back to being serious though.  Having spent at least three hours listening to presentations, analysts asking questions and Sony execs trying to avoid answering some of them, what have I learnt?


The main thing is that we are an odd little segment of the population who think of Sony as a purveyor of awesome, if occasionally unreliable, game consoles and great first party games.  If the questions Sony was being asked in the calls are anything to go by most of the world thinks of Sony as a TV manufacturer who also make cameras.

After sifting through all the talk about about inventory levels of TV components we are left with a few nuggets of gaming gold amongst all the pyrite.  Here is a bulleted list of the main points, some of which I will expand on below:

  • They seem genuinely surprised by poor PSP sales.
  • Over 40m registered PSN accounts.
  • GT5 delay is causing Sony financial pain.
  • PS3 hardware to become profitable in Sony’s 2010 financial year.
  • Blu-ray still only about 6% of disc sales and 8% of the value of those sales.
  • Susan Boyle’s I Dreamed A Dream outsold Jacko’s This Is It by almost 2:1 (8m vs. 4.2m).

Poor PSP Sales
This one just kept coming up.  Here is a snippet from the results presentation:

PSP hardware unit sales for the quarter are about 4.2m and cumulatively over 60m.  We were planning to make up the shortfall in projected units in the first half [of the financial year] during the holiday season but unfortunately volume did not increase as much as we had hoped and we have downward revised our forecast for the year to 10m units.

Given that what sales numbers we have seen for the PSP suggest that the PSP-3000 is still selling reasonable numbers, Sony’s hope for making up that “shortfall” must have primarily been the PSPgo.  The same PSPgo that is still selling fewer units every week in Japan than the PS2.  So the PSPgo is a major factor in Sony slashing a third off of its PSP hardware sales forecast.

Naturally with fewer PSPs out there that has also had an impact on PSP software sales and that has an impact that ripples through Sony’s overall software sales.  Asked about the reasons for the 40m reduction in their software unit sales forecast for the year, Sony said

The biggest reason is the PSP software.  It’s a chicken and egg situation… first of all hardware sales were significantly below expectations.

Little wonder then that Sony are believed to be considering a relaunch of the PSPgo along with a rumoured price cut.  They have got to do something.

GT5 Delay Painful For Sony Too
We are all getting fed up waiting for the ever-slipping GT5 and Sony are feeling the financial pain of Kaz’s failure to reach a point where he is satisfied with the game.  They were asked about how their Q4 software forecast met with internal targets they had previously set.  The answer went like this

In fourth quarter we are seeing an underachievement of the target by ¥20b.  One reason is the delay in the launch of Gran Turismo [5].  We were originally scheduled to launch Gran Turismo [5] this year but it looks more likely that it will be after 2010 so that’ll be a significant factor.

Wonder if Kaz was listening in to the call.  Yes, they did say “after 2010”.  Whether that was a slight mistranslation by the translator and Sony simply meant in 2010 or after the start of 2010 I have no idea.  I listened to that part of the call several times to try and determine which was meant and it was not clear.  If, and it is a big if, Sony really did mean “after 2010” then given the context that would mean after their 2010 financial year which ends in March 2011.  A delay that long does not bear thinking about for us race fans or Sony.

PS3 Hardware Profitable In 2010
The very first question Sony were asked in the overseas conference call regarded their progress on attaining profitability with the PS3 hardware.  Sony’s Nobuyuki Oneda had this to say

Currently we are expecting the negative margin on the PS3 would be around five or six percent which is on target and then sometime in next year will be the positive margin from the PS3 hardware.  Because we are expecting to use the 45nm RX [he seems unsure of the word and there is some background discussion] the key devices and that will help reduce the cost for other materials too.  That is the main reason for the positive margins next year.

It will certainly be good news for Sony to finally be in the black, at least manufacturing-wise, with the PS3 within the next year.  Presumably by “45nm RX” Oneda-san means the PS3’s RSX GPU.  That being the case it is also the first confirmation from Sony that I have seen, or heard, that the PS3 Slim does indeed still contain a 65nm RSX alongside its 45nm Cell CPU.  The reduced cost for “other materials” will be down to the reduced cooling needed for the smaller, less power-hungry, 45nm device when it finally makes it into the PS3.

While Q3 saw some good numbers for Sony, it is important to remember that they are still forecasting a loss for the financial year as a whole for the Sony group (¥30 billion) and the game (PlayStation) part of their NPS segment.  So it may yet be a while before Sony has a profitable year.

I will leave you with the final statement made at the end of the overseas investor call…

This concludes the presentation.  You may now disconnect.  Good day.