Sony Is Bleeding Money (Again)

Today, Sony announced its recent financials, and the Tokyo-based electronics giant is hemorrhaging money.

For the fourth year in a row, Sony is in the red. This March, the company should post an annual loss of US$2.9 billion, Reuters reported. The loss is worse than expected.

The company is battling slow sales and a strong yen, which is pounding the company hard. Last year's earthquake in Japan as well as the flooding in Thailand disrupted production, eating into sales.

This comes as former PlayStation boss Kaz Hirai takes the reigns as the company's CEO.

"It won't be easy for Sony to regain its lost ground under new leadership, as its overall competitiveness has sharply weakened," Kim Young-Chan, analyst at Shinhan Investment Corp in Seoul, told Reuters.

"It's got structural problems that will take years to fix. "It's not just Sony but Japanese IT firms have similar problems. They are failing to innovate and produce industry-leading products in almost every major area from TVs to displays, tablets and smartphones."

Sony is keeping its forecasts for LCD televisions, but cut its PS3 sales forecast.

According to analysts, in the past few years, Sony has failed to lead the way with innovation. Hirai will need to establish a strong vision for the company if it is going to become profitable.

Sony sees $US2.9 billion loss, reveals daunting task for new CEO [Reuters]

(Top photo by David McNew | Getty)

Comments

    Best of luck to Kaz, seems like he'll need it.

    I'm not too sure how much the Vita will help them at this stage when it launches for us Westerners.

    I added up that the PS Vita will in total, with starter kits / cables etc (no games remember) Will cost around $450. This is extremely high for most people these days.

    All I can say is maybe they will look at Nintendo for guidance. After the price drop they did last year, their newest console became one of the fastest selling in Australia. That's would be a handy way to get some money wouldn't it?

      Possibly, but with the tech in the Vita, overall it would be more expensive than the 3DS, I'd wager 10 internets that if the Vita was priced as the 3DS is now, then they would be taking a pretty big loss on each unit.

      Selling lots of units at a loss isn't going to make you profitable any time soon!

        Actually, the Wii was the only console this generation to have been sold at a profit. The PS3, the 360 - pretty sure even the previous gen - were all sold at losses. They make their money through software sales.

          Heh, I didn't know that. I don't own a console, but by software sales, does that mean services such as XBOX Live etc?

          Selling at a loss isn't anything new for Sony anyways, they apparently make big losses on selling their LCD's, so i'm surprised they didn't cut that also compared to the PS3 cut.

            It's more to do with licence fees / royalties. Basically for every game that gets sold on a console, a certain amount of money from that game goes to the platform holder (i.e. Sony / MS / Nintendo). That's part of the reason console games cost more than PC games, because anybody can release anything they like on PC and they don't have to pay a fee to MS for every copy they sell on Windows.

            Thanks for the discussion, very interesting read :D

          Initially sold at a loss. All the consoles are currently sold at a profit, the cost to make them has gone down significantly. Microsoft would consider selling at a loss initially an investment to get as close to 10 million as possible before Sony launched, because it meant Sony has been playing catch up for years and gave Microsoft a big foot in the door. Sony would consider selling the PS3 at a loss a strategic investment because it was a vehicle for getting Bluray into homes and gave them a killer advantage over HD-DVD in the high-def video format wars.

    Hang on guys. We're missing the real story here.

    Bashcraft has written an article that isn't about porn and/or panties.

      Holy crap! You're right! It's a miracle!!!

      Either way, is anyone surprised that Sony are making a loss again? The only thing surprising about them is how they're still in business. Must've been helluva deal with the devil.

        Not really, they were a massive, massive company to start with. It'd take more than a few years of bad losses to knock them over.

        Look at Apple... they were 3/4 of the way down the toilet before Steve Jobs came back and pulled them out, now they're pretty much the biggest company there is. It is possible to turn these things around. Looking at the size of Sony's TV losses, you have to wonder if they'd do well to start by just cutting that part of the business loose rather than trying to salvage it.

          Yeah but like Apple is now their products are pure bs . Apple have absolutely nothing to offer any market (even audio and graphic industries have the exact same options in the windows market for a lower price, it's pure brand loyalty that carries them). Sony are facing the same issue. The quality of their HT gear (tv included), their car stereo gear, their personal audio gear is no longer top dog and hasn't been for more than a decade. For those that don't care about audio quality, they can get slightly less, slightly more or exactly the same quality from competitors at the same or lesser price and for audiophiles there is Rockford, BOSE, etc.

          Sony are running on luck and brand loyalty in every industry inlcuding gaming though gaming is far better off because it's such a small market in terms of competition. Cmon, PS3 took how many years to become a competitor all the while being made at a loss? PSP and it's variations is still the DS' bitch. The Vita is looking to do the same and unless the PS4 is a miracle device it's likely to go the same way.

          Apple and Sony are running on the stupidity that has come from brand loyalty. Sure the brand loyalty originally had it's place based on great products but nowadays it's a joke.

      See, the issues is the Vita might already BE selling at a loss. So price cutting any further is probably not possible without price drops in components. The 3DS was intentionally selling at a premium, but I doubt Sony would be doing the same.

        Check out this IGN article.
        http://au.vita.ign.com/articles/121/1216968p1.html

        Apparently the vita only costs US$160 to make. So they could probably reduce the price significantly to ramp up sales. I was going to buy one at launch, but after the 3DS launch, and the poor signs from Japan, I think you'd be crazy not to wait a little while for the chance of a price drop. I don't really thing Sony would follow Nintendo's lead with the ambassador program, so really buying a vita day one is a big risk. I'll be able to resist until games like Bioshock and Battlefield come out. Then I'll be sold. I finished Uncharted 3 recently and couldn't be more bored with the franchise, so my copy of Golden Abyss can rot on the shelf for a couple of months while Sony starts to sweat, then reduces the price. It's sad that sony is struggling, despite their incredible arrogance. I'd still rather them any day over Apple.

    I don't understand how a company can operate at significant losses for four years and still trade. Who is underwriting this?

      A lot of the losses are "paper" losses. Write-downs in value (for example, in the value of their LCD manufacturing unit). Not actual cash flow going out the door.

      Sony would also have had large cash reserves at some point and may still do.

      Finally, for a company as large as Sony and with the huge assets Sony has to borrow against, it isn't a problem getting enormous finance from banks around the world to carry them through bad years like this. They also own plenty of stuff they can sell off if they really need to. Sony has assets valued at US$167 billion or so. It can comfortable cover a loss of a couple of billion, seriously.

        Any bank that'd back Sony is the same kinda bank that would've been part of the cause of the GFC.

    Sony has a lot of... bizarre products. Like that tablet, that stupid mini 3D-TV, the Xperia Play etc etc....

    Sony needs to axe some divisions of it's tech labs, and focus on TV's and gaming.

      Actually, the only product they've made that's been "bizarre" would be that wearable 3D display. That's just wierd.

      As much as Sony shits me for being complete and utter douchebags, please don't bring the xperia play into this. I don't own but it's a great phone and has lots going for it.

      Their willingness to experiment with new product ideas should be viewed as a good thing.
      Even if those products aren't successful, the R&D and innovation involved would be applicable to future products and spur on advances in technology and design.

    Not surprised.
    April last year was the Great Sony Hack of 2011 (unless my dates are wrong, in which case, feel free to point, laugh and correct me), so if they do their reporting annually and consistently, they would have reported earnings from 2010, had the hack in 2011, and then lost money from people pulling out, bad PR generation, etc.

    Awwww poor Sony I really feel sorry for th .......... NO WAIT! They made my Vaio laptop that has never had a graphics card update since it was manufactured and therefore can't play BF3 !!! YOU BASTARDS!!!

      You actually wait for your computer manufacturer to release drivers?

        In terms of laptops it is the manufacturer that releases the drivers for everything. At least that's how it's been with the several gaming laptops I've owned (each a different brand)

      It's actually quite unusual for a laptop manufacturer to update a graphics card. If you want to play such a visually-demanding game you should probably do so on a desktop PC.

        Tell that to ASUS or Alienware or most laptop manufacturers.

          I wasn't aware you could swap GPUs in laptops.

            I wasn't aware we were talking about swapping out hardware.

    Playstation Smart TV.....there, fixed.

    I don't think Sony are in bad a position as is being made out.
    A couple of reasons, wouldn't a lot of that prospective loss be from R&D on the Vita and whatever potential PS4 they are making?

    I mean, it's not like they are STARTING development on it, the thing is probably 3/4 done as it is. There's be a shit ton being done on it currently.

    Having said that, I might pull back from a day 1 purchase with the Vita. I'm not going through my 3DS issue again.. And sadly, I think this is probably the case for a lot of people buying the Vita. So my guess would be a few months in and then a $50 drop at least. Might be running at a tiny profit/ loss... But at least then it'll be more affordable and possibly more profittable in the long run against the 3DS.

    The 3DS isn't actually as monumental as the original DS was. The DS had great titles all round and brought a new way of playing to the field... The 3DS literally brings a more than intrusive 3D ability and marginally better graphics.

    The Vita really SHOULD do quite well, but it all comes down to how they push it etc. Fingers crossed, I enjoy the MS/ Sony fanboi fights, I hope Sony doesn't let us down :)

    No idea why they never allowed 3rd party developers to make programs for the PS3. It's as powerful as a computer and could've been an amazing interactive tool. But they so very slowly allowed things like Quickflix, iView etc to be introduced. Why not different music visual programs? Why not better internet browsing? Why not interactive news? It can do so much but it's true potential will never be realised. I'm sure it would've made them a bit more money too.

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