Sony Revises Loss Forecasts, Set to Lose $2.1433 Billion This Year

Damn you, Xperia!

Posted By | On 17th, Sep. 2014 Under News


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Sony’s projected losses have increased according to Reuters, rising from 50 billion yen to 230 billion yen (about $2.1433 billion). Operating loss is also at 40 billion yen rather than turning a profit of 140 billion yen.

In case you’re wondering why Sony should be doing so poorly despite the awesome success of the PlayStation 4, it’s actually due to the company’s smartphone division where “the impairment of goodwill in the mobile communications segment” had led to a 180 billion yen impairment.

The PlayStation 4 is still going relatively strong with the console having sold 10 million units worldwide since launching a little less than a year ago. Sony hasn’t exactly been turning large profits with the PS4 but it’s thankfully much more profitable than when the PS3 first launched. What are your thoughts on the struggles of the company’s smartphone division and will the latest wave of Xperia devices help ease the burden? Let us know your thoughts in the comments below.

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  • iMan Vious

    Hmm, first they blame the pc, now they’re blaming the phones?
    What’s next they’re going to blame TV?

    • bardock5151

      Already have, remember they “streamlined” the bravia side of things last year. I wonder what they have left to sell?
      1.2.3…

  • Gaikai

    Looks like playstation is the only thing keeping sony alive, if they’re doing so bad they should just sell everything beside the playstation brand and continue only as sony computer enetertainment

    • bardock5151

      Their insurance side is making money.

  • demfax

    This is a writedown in goodwill. If you don’t know what goodwill or writedowns are, read this.

    http://www.investopedia.com/financial-edge/0113/writing-down-goodwill.aspx

    It’s basically a paper acknowledgment that their phone division isn’t as valuable as they thought it was.

    Comment on Eurogamer: It’s worth noting that goodwill impairment is not as bad as actual losses (in terms of ongoing business). It’s not CASH related. For example, if you have a company making 50m profit a year and you have your brand valued at 100m, then something happens and your brand is worth zero. You’ll take a 100m goodwill impairment, so you’ll make a loss of 50m that year, but you’ve actually got 50m coming through the doors to pay staff etc. It obviously affects stock price and it can have serious impact on debt ratio’s etc. But in terms of an ongoing business, it doesn’t mean that much.

    Sony is on its way to recovering from years of losses and recently posted a quarterly profit as almost all of their divisions were profitable. They are not going bankrupt.

    Sony has total assets worth US$148.9 billion dollars, yearly revenue of $75+ billion, and $27+ billion in total equity. It is still one of the largest corporations on the planet with 150,000+ employees, ranked #233 in The World’s Biggest Public Companies on Forbes, and ranked #94 on the Fortune 500 2013.

    One rating agency’s opinion on Sony’s stock means almost nothing. Sony is recovering in finances, it posted a profit last quarter with almost all divisions reporting a profit including the Games division, and its stock price is stable or rising recently.

    Sony is selling or splitting off their lossy businesses (Vaio, TVs) and focusing on their profitable divisions. This means they’ll soon cut their losses and start turning a profit. Sony is in for a year or two of losses and restructuring, then provided their profitable divisions stay profitable, they’ll be on solid ground.

    The games division is in a net profit, posted a profit last quarter, and is well funded. Sony Computer Entertainment employs over 8,000 people working on Playstation across 50 countries. PSN is vastly improved and Sony is continually investing more into improving it.

    Macroaxis probability of bankruptcy declined from 79% to 44% and continues to shrink to this day, indicating a recovery.

    A single rating agency downgraded their opinion on Sony debt, it means almost nothing, there are MULTIPLE rating agencies and they all amount to investor’s opinions, not directly relating to Sony’s finances.

    As an example, streetinsider currently has 10 investment firms with a BUY rating on Sony stock, 5 hold, and zero sell. That’s likely due to Sony posting an operating profit last quarter, and stocks rising in the last 3 months.

    The picture is more complicated (and upward looking) than the link you posted. Sony’s finances have improved since then.

    Look up Sony on Wikipedia, Forbes, Google, Sony’s quarterly reports, etc.

    • bardock5151

      Damage control.

    • Mark

      Starting to think he works for them…………who cares THIS MUCH to inform everybody why “it’s not so bad”, other than this guy (aka Mike Derp)? Who has the energy in the tank to “fix” peoples’ negative perceptions about Sony, other than “Fax”? The only others that would, is maybe guys from NeoGaf or N4G. Lol. “Fax” needs to start doing this kind of control for Microsoft too, if he ever wants to be seen as impartial. This guy is legend!


 

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