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Loss would be only the second in Sony's history

In 2008, many companies that traditionally had high profits saw things change as the global economy went soft. Moving into 2009, the global economy hasn't changed and electronics firms that are traditionally profitable are now announcing that they could see a loss.

Sony is reportedly ready to announce only its second loss in the history of the company being publically traded. The first loss by Sony was in 1995 and was due to a major write down in the value of its U.S. based motion picture studio. Many analysts are predicting that Sony may report a massive operating loss of about $1.1 billion due to sluggish sales and a strong yen.

Sony shares dropped 9 percent in trading on the news cutting $2 billion from the firm's market value of $22 billion. Sony isn't alone though with other Japanese electronics firms looking at losses. Toshiba saw stock prices drop over 8 percent after media in Japan reported it was headed for a major loss this year as well.

Sony previously announced that it would restructure and cut 16,000 jobs worldwide with 8,000 of that number being full-time employees. That number is roughly 4 percent of Sony's global workforce.

Analyst Kazuhara Miura told CNN Money, "I think there's a good chance the company will further accelerate its restructuring from what has been announced in December."

Analysts feel that Sony will need to layoff even more employees than previously stated and perhaps even sell its financial unit that has been particularly hurt by the fall of stock prices. Sony had previously announced that it expected a profit of ¥200 billion. Sony officials have not commented on the reports at this time other than to say it did not issue the loss forecasts. Sony will talk about its financial state at the announcement of its quarterly earnings on January 29.

Sony has its hands in many markets with divisions ranging from Hollywood film studios to TVs and gaming systems like the PS2 and PS3. Sales of Sony's aging PS2 remain robust with a reported 50 million of the consoles sold in North America alone.



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A 4 year old could have seen this one coming
By omnicronx on 1/14/2009 12:28:02 PM , Rating: 2
Worst Recession in 60 years and sales in overpriced high margin products, in which the same quality could be had for less money with other manufacturers go down? Who would have thunk it?

Sony priced themselves into this mess, I can't feel sorry for them at all.




By inighthawki on 1/14/2009 12:43:37 PM , Rating: 2
I agree with your concept, but in that sense, wouldn't apple be losing a lot of money too? Most of their products have very good competition.


RE: A 4 year old could have seen this one coming
By omnicronx on 1/14/2009 4:23:33 PM , Rating: 2
Apple is losing money, their profits have fallen dramatically, and they have had to lower pricing. They also still dominate the mp3 player market, music distribution market, and they are beginning to dominate the smartphone market. In two of those markets they still retain a very large majority of marketshare, Sony does not completely dominate any market. I would also have to say that Apple has the ultimate consumer loyalty, Apple reaches a much broader demographic than those who typically buy Sony products. (I know dirt poor people who will still buy Apple products, I can't say the same about Sony products)


By quiksilvr on 1/15/2009 1:16:40 AM , Rating: 2
Lower pricing? The Macbook is still $1299 and $1599 (even pricier), the Macbook Pro is still $1999, $2499 and $2799, the Mac Mini is still $599 and $799 and the iMac is still $1199, $1499, $1799 and $2199. The only major price cut they did is to their shuffle and just didn't make an upper end iPod. Apple seemed to be boasting about how idiotic their consumers--I mean how well their uh, premium priced products are profiting...alliteration...yeah..

IMO, Sony sells a lot more stuff to a lot more people. Not only do they sell computers and mp3 players, but also a BUTTLOAD of TVs and their profit biting PS3 (they sold it at launch for $599 when it cost them over $800 bucks to make; to this day the $399 PS3 costs them $450 bucks to make). And this economy is killing them right now as is everyone else.


By afkrotch on 1/16/2009 1:46:43 PM , Rating: 2
quote:
Apple is losing money, their profits have fallen dramatically


They aren't losing money. They just aren't making as much as they'd expected. If they lost money, they wouldn't have made a profit.

quote:
I know dirt poor people who will still buy Apple products, I can't say the same about Sony products


Spiderman movie, Sony product. EQ2, Sony product. You know those dirt poor ppl who bought a Macbook? Sony battery in them.


RE: A 4 year old could have seen this one coming
By callmeroy on 1/14/2009 1:00:39 PM , Rating: 3
I agree with you but for one thing....this isn't the worst recession in 60 years, 1980-82 the recession was worse. Like I said though, I agree with you otherwise.


RE: A 4 year old could have seen this one coming
By MozeeToby on 1/14/2009 2:43:31 PM , Rating: 4
The difference is that the 80-82 recession was engineered by the federal reserve to curb inflation. Back then, the federal reserve pushed the overnight interest rate up to 15%, now the interest rate is at .25% to try to mitigate the losses we're seing.


By BansheeX on 1/14/2009 8:17:36 PM , Rating: 4
I agree, not to praise what the Fed did before since interest rates shouldn't be price fixed period. Like the arsonist with the firefighting duties, they "solve" problems that they create, getting medals for mitigating burn damage that never should have existed. This whole idea that they "fight" inflation is nonsense, arbitrary money creation is their main purpose.

The recession is the cure for the inflationary bubble that precedes it, like a junkie coming down from a high. Too bad 98% of America is too dumb to understand that and think the hangover victim needs shock therapy and a shot of adrenaline. In fact, the whole reason this one is so bad is because we did the same reinflation tactic in 2001 against what would have been a far smaller recession after the tech stock bubble under Clinton. But Bush, not wanting the recession in his term, decided to go with the low rate quick fix and ignore its future consequences. That filtered the inflation into home prices for a few years. Now Obama is trying to reinflate it at the expense of the future AGAIN. Ron Paul was the only candidate who had a clue in either party.

When rates on bonds are this low, no legitimate savers domestic or broad want to buy and hold. That makes the only buyer for government debt the Federal Reserve with their magic checkbook on our behalf. Pure inflation that will eventually cause runaway increases in the cost of living. It didn't work in Weimar or Zimbabwe and it won't work here. Can we expect foreigners with their massive dollar reserves and pegged policies to soak up that dollar debasement indefinitely? They're already suffering from the money they already loaned our broke consumers. They'd be idiots to continue loaning us money, we're SPENDING IT ALL, we can't pay it back with a product, Obama is going to build non-exportable roads with it. It makes no sense, they are going to destroy themselves.


RE: A 4 year old could have seen this one coming
By afkrotch on 1/14/2009 1:02:10 PM , Rating: 3
Huh? This didn't have anything to do with the prices of their products. It's just the economy is crap. A strong yen, means less Sony products being exported to other countries for sales. For products staying in Japan, less purchase power by the consumer, so less spending on high cost electronics from any company, whether it be Sony, Samsung, Panasonic, etc.


RE: A 4 year old could have seen this one coming
By omnicronx on 1/14/2009 4:17:03 PM , Rating: 2
quote:
This didn't have anything to do with the prices of their products.
Sony prices their products based on customer loyalty and the fact they are a household name, how doesn't this have to do with the prices of their products?.
quote:
A strong yen, means less Sony products being exported to other countries for sales.
I don't see how one necessarily equates to the other, being a high margin product, Sony can, will and already has adjusted their pricing for items exported to other countries. What happens for products staying in Japan also has to do with the high pricing of their products.

For comparison, Samsungs most recent quarterly profits rose 37%, and panasonic is suppose to release their data soon, and they are also expected to see profits rise.

So if what you are saying is true, why are the other big Japanese players not feeling the pinch?

My guess? The other big players entire business does not rely on high margin products.


By nuarbnellaffej on 1/14/2009 7:34:36 PM , Rating: 2
quote:
For comparison, Samsungs most recent quarterly profits rose 37%, and panasonic is suppose to release their data soon, and they are also expected to see profits rise. So if what you are saying is true, why are the other big Japanese players not feeling the pinch?


Um, actually Samsung is a south Korean based company.


By afkrotch on 1/16/2009 11:33:31 AM , Rating: 2
Canon, Sony, Toshiba, Toyota, Honda, and multiple other Japanese companies have had to slash profit forecasts.

Even Samsung or LG (both Korean companies) have had to slash it's profit margins.

The biggest difference between the companies is the sheer size of them. The larger, more diversified your company is, the more you can lose. I highly doubt you can name any other Japanese company that is in so many markets as Sony.


RE: A 4 year old could have seen this one coming
By Nakecat on 1/14/2009 1:14:09 PM , Rating: 2
I agree, SONY did it by themselves.

SONY used to have good quality product and people are welling to pay premium price just to have it's name on it.

But things have changed, there are many other competition out there with less pricey and better quality.

Especially with a tough time like now, people are not going to spend money like we used to, we compare and try very hard to save ever penny we could.

I got a PS3 80GB for my brother for xmas 2007 becasue there were a lot of promotion out there with free Blu-Ray discs and price cut. Sony failed the Xmas sale this year, no price cut or special promotion for PS3 while xbox 360 goes to $200 price tag.

If I'm Sony, I would mimic the same strategy like Microsoft, put up different models.

basic: no hdd, no blu-ray $200
pro: with hdd, no blu-ray $300
elite: with hdd, with blu-ray $400

And you can make more money just selling the accessory.

Also, i hate the way they changed the LCD TV Model this year. So many different lines and got everyone so confused.

Most people like the way it was, simple, 3 lines, top, middle and basic. i don't want to spend extra time just to figure out what's the difference between s, w, v, xbr... etc.


By Reclaimer77 on 1/14/2009 1:25:03 PM , Rating: 2
quote:
Also, i hate the way they changed the LCD TV Model this year. So many different lines and got everyone so confused.


Forget their LCD's. It broke my heart when they killed their Bravia line in favor of their crappy LCD's..

sigh


RE: A 4 year old could have seen this one coming
By chdude3 on 1/14/2009 1:44:47 PM , Rating: 2
Right... two models without Blu-Ray so that all the existing games on BD won't work with those PS3 models! Fantastic.

I love my 360, but 3 SKUs has always been stupid on MS's part.


By Nakecat on 1/14/2009 2:15:30 PM , Rating: 2
That's a good point there, i didn't think of the game would be actual blu-ray disc, i thought most of games were still on DVD like ps2.

While i agree different models / skus is very annoying sometime, my point was it's all part of business strategy to make people buying their products.


By Crysalis99 on 1/14/2009 2:04:26 PM , Rating: 2
While that all sounds good to the consumer, you got to look at it from thier angle.

Recently they were just reported to be getting closer and closer to breaking even with the PS3 (what was it, like only losing $50 per machine now?). Being in the dire straights that they are in, they are running around like a chicken with its head cut off. They have no idea how to recooperate all this loss revenue (smartly at least) so they are keeping staus quo.

I am no economist, but by lowering thier costs it will take that many more units to close that gap of loss revenue, in respect to thier video game division at least. And with the state of the economy, that probably isn't something they can afford right now.

In respect to them as a company, I do like them. The Sony products I do let myself go out and splurge on work great and havent had much of a problem, but in the past couple years or so, I have been admiring them less and less for being 'cheap'.


RE: A 4 year old could have seen this one coming
By b534202 on 1/14/2009 2:24:30 PM , Rating: 2
The only thing a PS3 can do without bluray & HDD is to watch DVDs.

Add a HDD and you can download those $10 games to play!

Who's going to pay $300 for that?



By PrazVT on 1/14/2009 3:58:29 PM , Rating: 3
How would that differ from a 360 without a HDD? And that comment isn't even accurate. The PS3 plays Divx / xvid / h.264 movies too. In fact in our household, we have 2 PS3s w/ external hdds connected that contain 100+ movies (a mix of divx and 720p h.264/AC3 blu-ray rips) - and the internal hdd has nothing to do w/ it. It's a great media center and with improved flash support you can watch video on some of those streaming sites. In fact w/ PlayOn, you can watch the instant play movies in your Netflix queue as well. I dunno, my family and I are happy with the PS3.


RE: A 4 year old could have seen this one coming
By teckytech9 on 1/14/2009 3:58:52 PM , Rating: 1
Actually, for $300 the PlayStation 3 is a steal for its computational capabilities. Many universities are loading Linux and using these machines for just this purpose.

Also interesting in the internal architecture technology utilizing high-speed buses which surpasses any high-end PC offered today. If Linux could only access the Nvidia GSX processor, then game play on the PS3 would surpass any PC offering.

http://www.spectrum.ieee.org/aug06/4256


By StevoLincolnite on 1/14/2009 11:00:57 PM , Rating: 2
quote:
Also interesting in the internal architecture technology utilizing high-speed buses which surpasses any high-end PC offered today. If Linux could only access the Nvidia GSX processor, then game play on the PS3 would surpass any PC offering.


It's *still* only a Geforce 7900 based chip, and it *still* only has a relatively pitifull amount of RAM. (Which a chunk of it will be gobbled up by the operating system, leaving you with even less)

High speed buses or not, The PS3 cannot surpass a PC equipped with a 3ghz Quad Core, 4gb of ram, and a Radeon 4870 X2 for gaming quality, the reason why the PC can get away with it's "Slow buses" is simply because it has enough Ram, to cache everything it needs.

Sure the Cell may be powerful, but I wouldn't use a Q6600 @ 4ghz paired with 512mb of ram and a Geforce 7900.


Sony Stuffs Are Too Expensive
By SpaceJumper on 1/14/2009 1:03:38 PM , Rating: 2
If Sony lowers the prices then Sony will not suffer the losses.




RE: Sony Stuffs Are Too Expensive
By Hiawa23 on 1/14/2009 1:47:19 PM , Rating: 2
I have always been a fan of Sony as most of my products in my home is Sony branded, & I understand all the hate that many have with them but honestly, all my Sony products have been fine which is why I continued buying Sony if I felt the price was right.

I also own a PSP & all of their consoles, PS3 included. I think the global economy has alot to do with what's going on as alot of companies which were usually profit rich is now hurting, so it isn't just Sony.

I have no idea how to fix these issues but I hope someone finds something in the near future or many innocent humans are going to continue to suffer. I really can't bash Sony for overpricing their products, as, that's what every business is in business to do, which is make as money as possible. Are their products expensive, yes, but I can't hate on them, as their alot of companies hurting.


RE: Sony Stuffs Are Too Expensive
By AlexWade on 1/14/2009 3:40:08 PM , Rating: 4
Sony is a very good brand. But you can do better for less by not going Sony. Sony is like Bose, except Sony is good. You pay for the name.

My gripe with Sony is their insistence for not using cheaper standards and instead trying to push their proprietary standards. For example: memory stick, just to name one out of many. My other gripe with Sony is their love-fetish with DRM. Remember the rootkit fiasco?


RE: Sony Stuffs Are Too Expensive
By afkrotch on 1/16/2009 1:55:06 PM , Rating: 2
memory stick > SD, CF, etc.

Why? It's much faster.


RE: Sony Stuffs Are Too Expensive
By h0kiez on 1/14/2009 4:22:47 PM , Rating: 2
"their alot"? Really? Talk about instantaneously discrediting everything you say.


RE: Sony Stuffs Are Too Expensive
By hduser on 1/14/2009 2:11:06 PM , Rating: 2
If Sony lowers the prices then Sony will not suffer the losses.

How does that statement make sense? You lower prices to hopefully make it up in volume or gain marketshare. Otherwise, you just end up losing more money.

Frankly it goes to show how the competition has caught up to Sony in 10 years. Sony has always been a premium brand name selling stylized high quality electronics for years. Lets wind back the clock 10 years ago, If I had a choice to buy a CRT tv and I had a choice between a Samsung or a Sony Trinitron, I would buy the Sony because of the technology and because of Samsung dubious build quality even though the Sony was more expensive. Now in 2009, it seems Samsung has caught up and surpassed Sony on the tech and build quality at a lower price.

I've always enjoyed Sony products and have had mostly trouble free experiences with them. So their name is still good with me. But I find it increasingly hard to justify paying a premium when other brands are almost as good if not better in some respects.


RE: Sony Stuffs Are Too Expensive
By omnicronx on 1/14/2009 4:31:31 PM , Rating: 2
I totally agree. I also do not agree that Sony can change their current fortunes by lowering prices, that boat has long sailed. Their entire business model is based on sony products being 'Superior', thus the justification for the higher price. Simply lowering their price will only put them on par with other manufacturers. Sony needs to get back to the company of old where the higher price is justified. The only way they can do this is by manufacturing better products.


yep.
By Crysalis99 on 1/14/2009 12:21:38 PM , Rating: 5
Yeah, its been a rough year all around (2008, of course). Keeping work sucks, finding work sucks even more and keeping hold onto every penny earned is becoming harder and harder...

PS: A knife to the throat of anyone who dares start the war here.




Sony weird practices are to blaim IMHO
By romansky on 1/15/2009 2:08:15 AM , Rating: 2
Two weeks ago I bought a SONY VAIO SR290, cost me some 1250$, for that price I wouldnt imagine they turn off "VT" in the processor.
Their reasoning is that this is not an office machine... wtf...

Since I need to use VMWARE for some home projects I am working on I obviously returned it...

Thats 1250$ less for SONY, but SONY doesnt care...




By afkrotch on 1/16/2009 2:00:05 PM , Rating: 2
It's an ultra-portable, what did you expect? More options put in, more heat, more battery life lost. It makes perfect sense to keep things to a minimal on an ultra-portable.

If you want to use VMware or some other program that requires more processing power, why the hell are you even considering an ultra-portable?

quote:
Since I need to use VMWARE for some home projects


If it's a home project, where the hell is your home computer?


Sony stuff ain't too hot
By daar on 1/14/2009 6:39:52 PM , Rating: 3
I liked Sony during the late 80's and early 90's, they made a lot of things which I felt were head and shoulders above the competition. However, most of their products seem pretty sub-par now, or simply average compared to the competition. Don't get me wrong, they still do have the know-how to build nice products, but reliability, something which I felt Sony used to be at the top of, has dropped quite a bit to the extent that I do worry how long it'd last. Even if they do build a decent product, they hamper it with their ridiculous insistence of proprietary formats, like memory sticks for their cameras.

Sure, memory sticks might not be bad, but they're pricier and it's the only device which I'd own that'd use it. I could pick up a Canon or Nikon which would give me similar or perhaps better performance without having to go through memory sticks.

Even among the general populace, Sony seems to only be seen as slightly better than average, right before sales clerks tell them there are better choices. The most loyal fans from my experience were Chinese consumers, they seemed to really love the branding regardless of performance. A good reason for American companies to make a memorable first impression in China with their goods I guess.




"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007

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