The Downfall of Sony

[Sier_Pinski]

Sony has just posted their fiscal 2012 results: Not so good, either.

http://www.businesswire.com/news/topix/20120510005771/en

Quoting from another article that summarizes:

Sony's fiscal 2012 ran from April 1, 2011 through March 31, 2012, with the company reporting net revenue of ¥6.49 trillion ($79.1 billion), down 9.6 percent year-over-year from the ¥7.18 trillion (approx. $89 billion) reported at the end of fiscal 2010. After expenses, Sony reports an operating loss of ¥67.3 billion ($820 million), which is actually a smaller loss than that reported at the end of fiscal 2011 (¥199.8 billion/approx $2 billion).

Year-over-year sales decreases were primarily due to Sony's Consumer Products & Services (CPS) and Professional, Device & Solutions (PDS) divisions, with CPS sales down 18.5 percent at ¥3.13 trillion ($38.2 billion) in 2012 vs. ¥3.84 trillion (approx. $48 billion) in 2011, resulting in an operating loss of ¥229.8 billion ($2.8 billion) – more than a 2,000 percent decrease from 2011's operating income of ¥10.8 billion (approx. $135 million). CPS encompasses Sony's consumer electronics sectors, including LCD TVs, PCs, photography solutions and, of course, gaming.

 

[RTSolvalou]

The thing about PS4 not being able to play used games is paired up with the concept of paying an unlock fee to make the game work, it's all about getting the money back that developers claim to be losing to the used game industry. (who make games that aren't as good nor have the replay value that games used to, :/ )
I'm not sure who the bad guy is here, are the developers lying or are we genuinely hurting them?, I haven't bothered to get the truth out of that, it's probably nowhere to be found anyway.

In a sense this just condones making copies of discs which you can then sell or give to other people as the dev will still get paid when they unlock it, I think this is awesome because we can give the finger to EB/gamestop/gametraders etc who buy a game used for $15 then try to sell it for $70.


Back to Sony, their upcoming phone looks promising (and the Xperia S/U/P design looks awesome, but the phone just has a few quirks), and if they can just focus on what's important (battery life, camera SENSOR, good software, the right designs, and some innovation) then they can storm that market. Most manufacturers have been sacrificing battery size just to make the phone thin, they need to stop doing that.

 

[Tornado]

And it’s threatening the very survival of some of these companies. By all accounts, Sony is directly on the chopping block. Last week, ratings agency Fitch, slashed the credit rating of both Panasonic and Sony. Panasonic lost two notches to BB and Sony lost three to BB minus. To anyone familiar with financial services, these are very bad credit ratings – called 'junk bonds', and a clear sign that the health of these companies is only marginally above, well, the health of the Greek economy.

It’s not just Fitch that has slashed the credit rating of Sony, either. Moody’s and S&P both also rate Sony and Panasonic just marginally above junk status.

But, even more damningly for Sony, the only reason that Panasonic is considered to be a healthier corporation and “more likely to survive than Sony,” is because it has large business interests that have nothing to do with consumer electronics.

Fitch’s head of Asia Pacific, Matt Jamieson, said in a conference call when the company announced these new ratings for both companies "has the advantage of a relatively stable consumer appliance business that is still generating positive margins."

Linky.


So... that's not a good sign.

 

[sumbrownkid]

Did that loss happened to account for that huge acquisition of Gaikai?

Because that purchase ate a huge chunk of cash.

Edit: A quick Wiki search led me to $380 mil USD.

Which is like a gazillion Yen or something.

 

[Omnis]

Sony would do best to just fold and split up the remainder of its profitable ventures into their own entities.

It looks like the Koreans won the OLED war. Sony and Panasonic teamed up and basically dumped all of their money (literally all of it) into panel technology to compete with the behemoth Samsung-LG partnership that was driving them out of business.

I don't think they'll be able to appease creditors with the returns they're expecting from this gamble-- hence the credit downrating.

 

[niky]

The Panasonic LCDs we've owned have been pieces of junk. Sony has always made great TVs, but Sammies and LGs are now of comparable qualoty at a much, much better price...

RIP, Sony... what a waste.

 

[Shaun]

TBH I'm more concerned about Panasonic.
At least they still make some products I would consider buying.

Cheers Shaun.

 

[priesty_lfc]

Sony will be ok imo,

They got slack with there TV's but there 2012 models (HX853) are fantanstic and have been voted 2012 best buy TV.

They get back on track with there TV business and slowely they'll recover, Playstation will also continue to do really well for them, with the cheap PS3 now on sell that will have alot of life left and with PS4 hopefully in 2013 it's not that bad!

 

[Luminis]

Linky.

So... that's not a good sign.

It sure as hell isn't. And I've said it a dozen times before: You can bet your butt that Microsoft (and to a lesser extend, Nintendo) are already contemplating ways to abuse Sony's difficult situation to cut into their market share.

Sony will be ok imo,

They got slack with there TV's but there 2012 models (HX853) are fantanstic and have been voted 2012 best buy TV.

They get back on track with there TV business and slowely they'll recover, Playstation will also continue to do really well for them, with the cheap PS3 now on sell that will have alot of life left and with PS4 hopefully in 2013 it's not that bad!

The gaming devisions of Sony has been taken into account when these ratings were made. And I suppose that the same can be said for their TVs.

 

[Keef]

Well, I think with Sony's new range of XPERIA phones, I think Sony may just turn this thing around. Those phones (all from my Mini Pro to the new Xperia Solo and P are amazing!)

I don't know of a single cell carrier in the US who offers Sony-Ericcson phones. If anybody does it's surely one of the many carriers who own a very small percentage of the market, thus rendering Sony's cellular efforts in the US basically a waste of time.

 

[HELLAFLUSH240SX]

I havent seen a Ericcson phone since AT&T was Cingular.

 

[sumbrownkid]

^As far as I know Verizon and AT&T carry them, so nationwide appearance in stores isn't a problem.

The problem is that those stores also sell Droids and iPhones.

 

[Scaff]

Linky.


So... that's not a good sign.

But not quite so bad when you add in the part of that article many seem to have missed:

It’s not all doom-and-gloom of course, and no one is suggesting that Sony is about to file for bankruptcy. The company still enjoys the support of its bank partners, and its digital camera and gaming segments are high-margin and don’t suffer the same competition from cheap electronics from Korea and China.

And thanks to the sale of its chemicals business to a Japanese state bank, Sony is anticipating a full-year profit of $US1.63 billion.

Nonetheless, the market remains very tight for Sony, and if you’re a fan of Sony products, now might be a good time to splash out on a couple of full-priced products to support the company.

Unfortunately a lot of Sony's problems are macroeconomic - that is, Sony's largely at the mercy of the global economy right now. It went into the current financial crisis in Europe (one of its most important markets) in poor health, which makes it all the more difficult to ride the bad waves.

All of which must be added to the fact that Sony are also (by any standard) a cash rich company, with (as of the last financial report) over $6 billion dollars in cash assets (i.e. those that can be used to fund the business with zero delay) and $9 billion in pre-authorized credit (from those supporting Bank partners).

The junk bond status reflects a desire by the markets to force Sony into a major restructure as much as anything else, at its core it still has a lot of viable parts, they just need a damn good sort out. Its also suffered heavily as a result of a strong Yen (vs the dollar and Euro) and a large amount of the losses each year have been currency devaluations as well as business losses).

That's not to say its all plain sailing for Sony (its not), but its also a long way from the prophecies of doom as well.

 

[DK]

I have had 2 Sony Ericsson phones, including my current one. The charging port of my 1st phone (a W350i) broke after c.30 months and the main menu of my current Xperia X8 has been screwed up - it's just blank apart from the apps in the corners of the screen.

I can certainly attest to the quality of Samsung products, for starters, I have a Samsung laptop. The biggest problem I have with it is keeping the screen dust-free!

 

[a6m5]

Sony-Ericsson phones I've used in the past were bullet-proof. In fact, my current alarm clock of many years has been this guy, a tricky twist phone of all designs. I was so skeptical about it's durability before getting it, but it's still the best alarm & calculator I own. It did get outdated as a phone years ago.

 

[Ibonibo]

Sony-Ericsson doesn't exist anymore. It's just Sony Xperia Phones now, they knew about the bad reputation Ericsson made them.

Also all Sony's phone are Droid phones.

Wait and see.

Give Kaz time. His restructures are only making their way into place now and it needs time for them to take effect.

If Sony does it job at offering high tier, pionier electronics like they used to, I see them healthy again in 2 years.

Anything before is just hopeful whishing, this needs time, it's not a 5 people business.

 

[HELLAFLUSH240SX]

Sony will never win the phone market, they are losing the TV market, and Microsoft pulls in more money than Sony from consoles.

It will be hard.

 

[risuku13]

I think Sony phones have been improving. Just got an Xperia U and it is so far the best phone I've ever owned. Compared the my lemon Samsung Avila.