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  (Source: Reuters)
Company rejects proposals to break off its entertainment unit via an IPO

After rebuffing a top shareholder's breakup proposal, Japanese corporate conglomerate Sony Corp. (TYO:6758) turned a lean profit, swaying some that it had made the correct decision.

I. Entertainment Unit Rebuffs Spinoff Calls, Posts Profit

The company's entertainment units were a tale of two segments.  Sony Music Entertainment (SME) reported ¥112.0B ($1.131B USD) in revenue and an operating income of ¥3.5B ($109M USD).  The unit which was formed out of the 2008 split of the Sony BMG joint venture with Bertelsmann AG (FRA:BTG4), was boosted by strong sales of Daft Punk, Justin Timberlake, and P!nk's new albums.  Sony reports that its music unit benefited from equity earnings from its iconic sub-brand EMI Music, which it acquired in June 2012.

Meanwhile the movie unit, Sony Pictures, struggled.  It trimmed its losses from last year, posting a loss of ¥3.7B ($38M USD), however the true loss would have been ¥14.0B ($144M USD) were it not for the ¥10.3B ($106M USD) in income for selling off its music (soundtrack) catalog.

Daft Punk
Columbia Records electronic rockers Daft Punk channel some secret society mojo, helping power parent company Sony to profit in Q2. [Image Source: Reuters]

Leading the way to this loss were a series of high profile flops including "After Earth" (Production Costs: $130M USD; Global Ticket Sales: $236M USD) and "White House Down" (Production Costs: $150M USD; Global Ticket Sales: $116M USD).  The studio's lone major success for the quarter was "This Is the End" (Production Costs: $32M USD; Global Ticket Sales: $108M USD).

Together the two units were profitable, a win for Sony after it rebuffed a proposal by Daniel S. Loeb, billionaire hedge fund manager of the New York-based Third Point fund hedge fund.  Mr. Loeb, whose firm owns 7 percent of Sony's shares, demanded a spinoff via initial public offering, of the entertainment units, leaving Sony solely focused on electronics and finances.

For now, though Sony remains hesitant to accept the proposal that would take it away from its current monolithic strategy, which hearkens back to the zaibatsu of pre-war Japan.

II. PS4 Seizes Lead in Pre-Orders as Sony Spends Deeply on R&D

Sony's gaming unit losses soared 32 percent to ¥14.8B ($149M USD), as sales of the PSP, PS2 (yes, Sony's still selling it), and PS3 declined, producing a revenue of ¥117.9B ($1.191B USD).  Sony also spent deeply on research and development for the PlayStation 4, which launches later this year.  

It's unclear who has the upper hand in console preorders -- Sony or its arch-rival Microsoft Corp. (MSFT) whose Xbox One will vie with Sony's PS4 for market dominance this holiday season.

Despite controversies over digital rights management, which Microsoft in part changed course on to placate the public, Microsoft's upcoming Xbox One was reportedly in the lead in early spot-check based preorder estimates.

However, it appears Sony has since taken the lead as both Best Buy Comp., Inc. (BBY) (#1 in pre-orders versus #2 for the Xbox One) and Amazon.com, Inc. (AMZN) (#15 in overall "Video Game" section sales, versus #38 for the Xbox One):

Xbox One v. PS4
(Amazon.com)

Best Buy Xbox One v. PS4
(Best Buy)

Sony's console is priced at $100 USD less than Microsoft's.  It has less voice controls and lacks the cloud-based computation offloading of the Xbox One, however the latter is a doubled edged sword, as Microsoft has said developers have the ability to use cloud computing in such a way as to make games unplayable offline, and in fact it encourages them to do so.

III. Xperia Sales Grow, LCD Unit Becomes Profitable

The Xperia-anchored Android smartphone unit also crept to profitability, turning last year's loss of ¥28.1B ($285.8M USD) into a profit of ¥5.9B ($60M USD) on a revenue of ¥389.0B ($3.929B USD).

Looking at Sony's other device units, digital camera sales were predictably down as the segment continues to be cannibalized by smartphone point-and-shoot.  

The television segment, though showed "significant improvement" owing to "improved product mix in LCD televisions and cost reductions" which allowed the unit to make a profit of ¥3.4B ($34M USD) compared to ¥10.0B ($101M USD).  That profit comes despite a "significant" drop in LCD TV unit sales.  Sony was among the LCD TV makers pitching 4K displays at the market this year.
 

Sony's is pitching 4K LCD TVs at the market.  The LCD TV unit obtained profitability in the second calendar quarter, despite a drop in unit sales. (55" XBR-55X900A (4K) pictured)
 
Overall, Sony made ¥3.5B ($35M USD) in profit on ¥1.712T ($17.3B USD), narrowly better than the ¥1.7T in revenue analysts expected.  The profit marks the second straight quarterly profit for Sony who last quarter reversed a long string of losses, earning ¥43B ($458M USD).  The second calendar quarter of 2013 is Q1 of Sony's fiscal 2013.  Sony shares were up 1.74% in today's trading.

Sources: Sony, Bloomberg [analyst estimates]



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Kinect vs no camera
By vitp on 8/1/13, Rating: 0
RE: Kinect vs no camera
By venym76 on 8/1/2013 1:31:29 PM , Rating: 4
Yea, I'll spend $50 on a camera for the PS4 and still save $50 over the overpriced/underpowered XBONE.


RE: Kinect vs no camera
By StevoLincolnite on 8/1/2013 7:47:23 PM , Rating: 2
Well the Xbox One is $550 here, the PS4 $500.

Nice to know Microsoft is actually price gauging us Australians less. - It actually makes the Xbox One a more attractive proposition compared to the price discrepancy overseas when comparing the two machines.

Besides, these days, I primarily game on the PC, if I were to get a console it would be the Xbox One for Killer Instinct and Halo, console games are way to expensive for me to invest to much cash into.

For example, I bought the Xbox 360 early in it's life, I paid roughly $80 per game and I have almost 100 games in my collection.
On Steam, I have several hundred games (DAMN THOSE SALES!) and not once paid more than $20.
Doesn't matter how much cheaper the console is than a PC, in the long run the PC is still cheaper.

I've still got the PC I built when this generation of consoles were launched with a Core 2 Quad Q6600 @ 3.6ghz, 8Gb DDR2 Ram. - Dropped in a Radeon 6950 a couple years ago and it's yet to meet a game it can't run at 1080P.

It pales in comparison to my main PC however (i7 3930K, 32gb ram, Tri-7970's), but it goes to show not everyone needs Haswell and a couple of Titans to game on the PC.


RE: Kinect vs no camera
By Nfarce on 8/3/2013 6:03:24 PM , Rating: 2
quote:
but it goes to show not everyone needs Haswell and a couple of Titans to game on the PC.


No, it's doesn't, if you want to game in run-of-the-mill 1080p resolution with turned down graphics sliders. However, if you want to run 5760x1080 triple monitor setup or 2560x1400/1600 QHD monitor setup and still enjoy high settings, you will need ever bit of two Titans to make it happen to keep frame rates above 60fps. And Crysis 3 still would bring two Titans to its knees in said setups.


RE: Kinect vs no camera
By Da W on 8/1/2013 8:59:16 PM , Rating: 2
Very mature


RE: Kinect vs no camera
By Samus on 8/1/13, Rating: -1
RE: Kinect vs no camera
By weskurtz0081 on 8/2/2013 8:25:34 AM , Rating: 3
quote:
The only reason to consider the XBOX over the PS4 is the media features (XBOX has HDMI in/out) and the network (Live/Playstation Online)


So, games should NOT play any role in the decision?


RE: Kinect vs no camera
By BZDTemp on 8/1/2013 1:31:47 PM , Rating: 3
Why is that worth noting?

There is a ton of difference between the two systems and for instance I'd say for most gamers what matters more is that the PS4 hardware may be up 50% more powerful than the XBOX One. Mattering also is that Miscrosoft box seems to be keeping to their closed platform thing as opposed to Sony which allows users to change hard drive with just standard PC units, use common Bluetooth headsets and all sorts of standard USB gear.

That is all things that matters more than a camera which frankly is for Wii style gaming and not for the more hard core stuff.


RE: Kinect vs no camera
By EnzoFX on 8/1/2013 5:22:54 PM , Rating: 2
because some people seem to think the Kinect cam costs MS $100... GTFO Kinect. Who wants forced functionality? Bleh.


RE: Kinect vs no camera
By inighthawki on 8/1/2013 5:59:31 PM , Rating: 1
It very easily could. The Kinect is not just a camera, it is practically a mini computer with a custom designed processing unit. Not to mention the advances in software technology and gesture recognition. People seem to forget that R&D costs money. The final price of a product is not just a sum of the manufacturing costs.

Also with the rumored improved memory performance in production units, I highly down the difference between the xbo and ps4 will be as great as 50%
http://www.eurogamer.net/articles/digitalfoundry-x...


RE: Kinect vs no camera
By Reclaimer77 on 8/1/2013 1:38:20 PM , Rating: 2
Except nobody wants the Kinect or sees it as value added.

So Sony's strategy is preferable. There are extras you may or may not want, so you buy them separately.


RE: Kinect vs no camera
By russki on 8/1/2013 1:48:36 PM , Rating: 2
I agree, if I want a motion controller then I'll buy it separately.


RE: Kinect vs no camera
By karlostomy on 8/2/2013 4:53:58 AM , Rating: 1
Disagree.

To me the ps4 is basically a ps3 with a bit more power under the hood.

Apart from more pixels and slightly better framerates, there is nothing new or innovative about the ps4 at all.

I am optimistic about the forced inclusion of kinect 2.0 as this will ensure it is available for developer creativity.

I have been around since the C64 and used to get excited about better graphics, but the marginal benefit is lost on me now. In short,more pixels are just boring to me.

The XBone offers a different strategy through kinect and some fresh ideas which could potentially be rewarding.

It's sad to see so many self-proclaimed 'hardcore' gamers stick to the same old same old pixel counting at the expense of new ideas.


RE: Kinect vs no camera
By Strunf on 8/2/2013 7:47:55 AM , Rating: 2
Marginal difference? I beg to disagree, environments are today more "realistic" than ever, "real" grass, "real" tree, "real" wind, "real" destructive environments... I for one don't care nor want to jump around it's fun sure but it's much slower too, I play mostly FPS, and strategy games both work much better with a keyboard and a mouse.


RE: Kinect vs no camera
By inighthawki on 8/2/2013 11:17:38 AM , Rating: 2
I don't think when he said marginal that he necessarily meant it was a negligible improvement, or anything of such. It's just that when you watch changes go from 8 color pixels > bitmaps > 2.5d > 3D > dynamic lighting and beyond, getting things like slightly better visuals get boring.

Oh sure crysis 3 is super pretty and if it ran on consoles at 60fps with full detail that's a huge step up from previous generations, but it can't, and even if it did, it's hardly an "innovative" experience improvement.


RE: Kinect vs no camera
By karlostomy on 8/3/2013 1:46:37 AM , Rating: 2
Yep, inighthawki, you nailed it.

The difference of which I speak relates purely to generational differences.

for example, people used to bicker and moan about the technical differences between the C64 and Amstrad. Then they quabbled about the difference between the amiga500 and atari ST. Then they wailed about the difference between the PS1 and the Sega Saturn. Then there was the beginning of the fanboy wars between the PS2 and the Xbox, culminating with the PS3 and xbox360.

The one constant that has remained in all of this are the extreme similarities between platforms in each generations.

Fanboys bickered, whined and wailed about slight differences among platforms, but the truth that remains is that no matter which generation you look at, the differences are negligible amongst comparable hardware for their time.

Let's not kid ourselves.
PS4 and XBone are similar again.
Despite the bleating of the fanboys.

Any advantage the ps4 has in graphical fidelity over the xbone is marginal at best. History has already confirmed this for all to see.


RE: Kinect vs no camera
By sphyder on 8/2/2013 4:32:18 PM , Rating: 2
Forcing the Kinect will not spur developer creativity as much as you would like to think. A vast majority of games are 3rd party developers. As a 3rd party developer, why hire an extra team to develop functionality that only works for half of your market? From a return on investment perspective, it is far more efficient to develop a game that can be easily ported between the 2 consoles.
The only hope of new Kinect functionality from 3rd party developers will be in the fitness/dance type games.
The same logic can be applied to the "cloud" offloading "feature".
With everything you see in regard to maximizing profit without concern for the customer (DLC, always on ala simcity, etc) I don't think this is a too far fetched.


RE: Kinect vs no camera
By karlostomy on 8/3/2013 1:56:43 AM , Rating: 2
not sure what your point is.

The xbone can already do everything the ps4 does, potentially minus a few pixels. That much is clear.

However, kinect2 on every xbone makes available a separate set of opportunities that are not available for ps4.

This is not rocket science.
What seems to be the problem with your comprehension?


RE: Kinect vs no camera
By Reclaimer77 on 8/2/2013 10:40:45 PM , Rating: 2
Blatantly ripping off the Wii's interface is new and innovative?


RE: Kinect vs no camera
By karlostomy on 8/3/2013 1:54:01 AM , Rating: 2
excuse me?

Di you just have a brainfart?


RE: Kinect vs no camera
By jnemesh on 8/1/2013 2:21:53 PM , Rating: 5
It should also be worth noting that Microsoft was the FIRST tech company to sign onto the NSA's PRISM program, and that your Kinect is REQUIRED to be connected AND calibrated for the Xbox to function AT ALL. Even without the NSA's involvement, Microsoft has still filed patents that target advertising to it's users depending on what logos are visible in the room, and by your facial expressions. They have another patent which will charge you for movie rentals based on how many people are in the room!

Some of us do not want Microsoft (or the Government) in our living rooms, thank you very much, but I will be going with the console that does NOT require the camera to function!


RE: Kinect vs no camera
By davidecreagh on 8/1/13, Rating: 0
"Features"
By Flunk on 8/1/2013 1:52:58 PM , Rating: 2
quote:
It ... lacks the cloud-based computation offloading of the Xbox One


That's not really a feature, it's just Microsoft encouraging developers to do processing server side. You can do that with any device that connects to a server, it's not really a feature per say seeing that every single network-enabled device can do this.




RE: "Features"
By FITCamaro on 8/1/2013 2:06:37 PM , Rating: 2
Be fair. The feature is that Microsoft is creating it for developers to use. Yes developers can create their own and have their games access it, but that costs more money.


RE: "Features"
By wobblebonk on 8/2/2013 9:48:19 AM , Rating: 2
... it's not free. You think Microsoft is running a charity here or something? It's probably pretty competitively priced, but definitely not free. (Titanfall devs talked about it a little bit.)


RE: "Features"
By StevoLincolnite on 8/1/2013 10:42:50 PM , Rating: 2
Don't forget that even the current generation consoles a-la, Xbox 360 and PS3, heck even the Wii could have used the cloud for processing tasks, only special piece of equipment you need is a piece of hardware that allows communications with the internet.

Yet, it never really happened for a multitude of reasons.
The Xbox One isn't a "special case" in that regard, just Microsoft has thrown more servers via azure at the problem. (Which those same servers will be used for other Microsoft products and/or services, it's not all dedicated to the Xbox.)


RE: "Features"
By Strunf on 8/2/2013 7:57:43 AM , Rating: 2
Why would this be a must have feature? there will be millions of players and I doubt MS will pay enough servers to do any meaningful work, chances are this cloud-based computing will use the power of all these connected xbox one for their own benefit, as in your x-box will be part of the cloud and help some other xbox one on its tasks, sure it could be nice for some but not for everyone.


Still a smaller market
By Ammohunt on 8/1/2013 1:51:25 PM , Rating: 2
The trend (to me) appears to be people growing up and away from consoles and for serious gaming towards PC's. Granted PC's are still more expensive than consoles but the added functionality is worth the premium for most consumers that have the discipline to save up for a decent rig ~$1000.




RE: Still a smaller market
By BZDTemp on 8/1/2013 2:27:20 PM , Rating: 2
It is all about which games people want to play. In my experience more and more people is having several platforms to play games simply so they can get at the games that take their fancy.

For many the cost of the machinery isn't really an issue the real issue is finding time to play. But for sure there are those which move away from shooters to more strategy based games and even further to turn-based ones. Others, like me, may have been all over the place since forever loving all sorts of games and thus trying all sorts of platforms (emulators on the PC is a great space saver in that regard).


RE: Still a smaller market
By Ammohunt on 8/1/2013 2:52:03 PM , Rating: 2
For me its the cost of the games. $499 for a console then $60 for a game even on PC put me out of no MMORPG gaming for almost a decade. Steam has brought me back into gaming full fold mainly due to great games on the cheap like Civ 5 for $7(i bought 2 copies) i have spent more on games in the last year via steam then i did all 10 years prior while my Xbox 360 gets played once a week by my kids.


flop???
By Myrandex on 8/2/2013 3:08:16 PM , Rating: 2
high profile flops including "After Earth" (Production Costs: $130M USD; Global Ticket Sales: $236M USD...

Yea I'll trade $130M for $236M any day...

Jason




RE: flop???
By BZDTemp on 8/2/2013 3:28:41 PM , Rating: 2
Sure except aren't the theaters and the distribution taking a big chunk out of those $236M?

I mean just as with everything else sold the retail price is not the price manufacturers are getting.


RE: flop???
By massimo. on 8/2/2013 4:25:37 PM , Rating: 2
Exactly. And in addition the cost listed is only for production - it does not include marketing which also runs in the tens of millions, if not more for a major release.


Funny...
By Totally on 8/1/2013 3:43:32 PM , Rating: 4
that people already have put up reviews on pre-orders.




... Did the writer do NO research?
By Saist on 8/2/2013 1:10:34 AM , Rating: 2
It's unclear who has the upper hand in console preorders

Em. It took the Xbox One over one month to match the same pre-orders that the PS4 managed in 3 days; and that's based on the assumption that primary launch retail partners were issued identical allotments.

If we assume that the launch allotments of the Xbox One are in-line with the manufacturing difficulties, and the still bidding ODM's, there's no question that the Xbox One is a massive pre-order failure.

Seriously, how many sites do I have to take a collective sledgehammer to over just how large a failure the Xbox One has been to date?




TV's
By drlumen on 8/2/2013 12:22:41 PM , Rating: 2
As far as their TV's are concerned, it will be a very quiet, dark & icy night in hell when I buy another Sony TV.




By massimo. on 8/2/2013 4:32:01 PM , Rating: 2
quote:
Microsoft's upcoming Xbox One was reportedly in the lead in early spot-check based preorder estimates.


You make this claim, but the article you linked says that PS4 is outselling X-Box 3:2 for pre-orders.




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