Torrid Quarter For Sony – $2bn Net Loss

With sales and revenue down over 17% compared to the previous quarter,  Sony have posted a net loss for the three months to December 31st 2011 of ¥159 billion ($2bn, £1.3bn) in their Q3 FY11 financial statement.  They describe the key reasons for the fall in sales as being the impact of the floods in Thailand, lower spending in developed countries and the comparative strength of the Yen.

The year-on-year fall in Sony’s sales was greatest here in Europe where they saw a decline of almost 26%.  Things were a little better for Sony in America where sales fell just over 21%.   Even in Sony’s homeland of Japan their sales fell by around 15%.  Further falls were recorded in China and other areas of the Asia-Pacific region.

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By far the biggest loss making of Sony’s divisions was their Consumer Products and Services (CPS) division, where all your favourite Sony gadgets are made.  Its global sales fell over 24% leading to the division recording a loss of ¥85.7bn ($1.1bn, £0.7bn).  Primarily the fall is attributed to falling sales of LCD TVs in Japan, Europe and the U.S., a situation which is further exacerbated by unfavourable currency exchange rates.

Perhaps the most troubling figures from the statement are the revisions Sony have made to their forecasts for the full year.  They had been predicting a loss of ¥90bn as recently as November but are now predicting that their results for the year will show a loss of ¥220bn.  More importantly for those of us here at TSA they have trimmed their forecast for PlayStation 3 sales by a million to 14 million sales for the financial year, which if it holds true will be a fall of 300,000 from Sony’s FY10.

PS3 sales in the last three months were a little higher than a year ago at 6.5 million versus 6.3 then.  The PS2 saw a substantial fall from 2.1m last year to just 900,000 this year.  Its fall of 1.2m was matched by the PSP whose sales dropped from 3.6m to 2.4m.  The statement makes no mention of the recently released PS Vita.

Source: Sony

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30 Comments

  1. “Welcome aboard, Kaz. Yeah… um… good luck!” accompanied by the thunderous noise of execs running to the hills. :)

  2. Poor Sony, I really hope things turn around for them.

  3. surely a major overhaul is needed for Sony? Those are big numbers, and only something big is going to change them into positives.

  4. I don’t know why Sony are wasting money on Kaz when they could have any of GAME’s top brass for a fraction of the cost. They sound like they know what they’re doing. ;)

  5. They need to concentrate more on top quality games like the Uncharted series and not try and push even more hardware to sell. A games console seems to be turning more into a home entertainment system instead these days.

    • But with new hardware sales comes new game sales. If they sell 14 million PS3s this year then there’s a potential 14 million customers wanting games too. Stay behind after class, please. :P

      • Only if the ‘after-sales’ make up for losses on the initial sale.

      • What losses, fella? (sorry if I’m asking a daft question)

      • The console market typically involves the manufacture selling the console for a loss. This loss is then covered by peripherals and games. As every game sold on PS360 must pay some form of licensing fee to Sony/MS and this is where the money comes from.

  6. I don’t think it is Sony’s fault. There is a worldwide belt tightening and people just aren’t spending the same amount of money they used to.

    • not being offensive, but whos fault is it if its not Sony? Yes people buy less because of the belt tightening, but this has been going on for a while now and Sony should really be changing their ideas/plans accordingly.

    • & yet Apple sold 37m iPhones & 15m iPads which are very expensive and a luxury non-essential item creating $43 billion in revenue & over $10 billion in profit over exactly the same 3 month period.

      Of course it’s Sony & the decisions they’ve made pretty much since the Walkman was surpassed and Sony no longer became the ‘go to’ brand for any market they compete in.

      • & Nintendo are near a billion down your point is what?

      • Companies selling electronic items deemed as a luxury in a time of recession can make billions, Sony haven’t which is what we’re talking about.

        Wii has flagged & reached end of life and Ninty made mistake of assuming it will still sell & chose to replace it this year not last, the PS3 is still prime console, what’s you point?

      • ^Yes, Sony are not a luxury brand. They fall precisely into the mid to high-end category that is suffering most at the moment.

      • Sony make loads of things Nintendo make a few.

      • funny you mention Apple that almost went bankrupt, Sony have never been in as bad of a position as Apple have in the past.

  7. Sony’s biggest problems

    Advertising : shocking
    Consolidation : they have way to many models of the same products
    Unification : why is the browser on se phones so much better than their tv and playstation browsers?
    Software : they need to hire someone else to make there software or start supporting more popular services like iTunes and wmp. (and yea iTunes is quite bad itself but most people have it)

  8. They need a bit of a shake up. Hope they turn it around.

  9. Huge flaws all round

    PlayStation assisted in launching CDs and Sony’s other companies obviously made money off CDs
    PlayStation2 assisted in popularising DVDs & Sony obviously made money off DVD related things
    PlayStation3 is where Sony started going wrong, it was supposed to launch Blu-rays and usher in sales of HDTVs, but Sony loses no end on TVs, Blu-rays themselves increase in sales but nowhere enough to combat the drop-off in DVD sales as downloads is obviously the future. Then with the launch of 3D on PS3 it was supposed to be the trojan horse to sell 3DTVs, well aside from them barely taking off, what’s the point if each one sold loses you even more money.

    Sony’s problems are many, Apple dominate the premium market, Samsung dominate the mainstream market & a million Chinese companies dominate the low end market… Sony basically have no market, they’ve been out-manoeuvred by everyone in every market they compete in.
    Just read that Sony’s financial services arm have been the highest profit making division in each of the past 9 years & in each of those years they’ve made money than all other Sony divisions combined & its jokes that Sony are a lucrative insurance company with a loss making electronics business attached.

    Some stats I read but haven’t verified
    62m PS3 sales and almost $4 billion lifetime losses (just gaming division)
    64m X360 sales and $1.8 billion lifetime profit

    The 2m sales difference is a drop in the water, the problems are huge, will investors even sign off on another gen, no wonder they want to prolong this one beyond its natural life

    One things for sure if Sony don’t change something then nothing will change, the model obviously doesn’t stack-up & hasn’t for years and yet Sony have showed no real sign of moving away from it, yes converging network based content onto all devices is the minimum they can do & they’ve done precisely that, the minimum.

    • Sony ARE evolving, though. That article you quoted, and I linked you to shows that Stringer (and Kaz, as his protege) have been gradually consolidating and reshuffling departments, and Kaz can now continue this process.

      There’s a long way to go yet, but Sony can get a decent foothold in the tablet market, if they move quickly and decisively. Buying out the Ericsson part from their phone business could help them push onwards with some good phones there, like the Arc S. Vita’s US and EU launches should be much stronger than the Japanese launch, and they have some rather compelling technology for TVs coming soon.

      So it’s not all doom and gloom, but there is clearly some rebuilding to do. I personally think that Kaz is the man to do so.

      • They need to cut a limb off

        The convergence around their digital offering & networked products has happened, it’s just natural evolution but they don’t lead in any digital markets, iTunes pees all over everyone & apparently Xbox does loads of movie business on 360 but Sony’s movie store does very little on PS3 & othe connected devices.

        Sony have dropped from 4th largest mobile make to 9th despite bringing their digital weaponry to those devices throughout 2011.

        It all seems to hang on EU/US Vita launch, which will probably solve nothing as these things always lose money for a few years.
        What next? The PS4 ushering in a new wave of TV tech so the loss making cycle can continue?

        Unless a limb is removed I can’t see a lasting turnaround taking place?

        Nokia removed a limb, not totally sure that it will work but they’ve given themselves a chance, will Sony?

      • Almost every big company at some point has to do the inevitable and cut a division or even most of their business off, back to IBM & as recent as HP, even Google who are making billions every quarter have cut off every finger & toe in an effort to head off Facebook becoming ‘the web’

        Meanwhile Sony have moved some metaphorical deckchairs around on the Titanic

  10. Nintendo are near a billion loss as well.

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