Eh guys, guess what? Merrill Lynch is back...

[Raijin]

...with another prediction. :p

Merrill Lynch (MER), perhaps the biggest Sony (SNE) hater, downward revised its financial forecast and cut its target share price today. ML also estimated a multi-billion dollar 5-year total operating loss related to the PlayStation 3.

FISCO news service of Japan reported on the ML analyst report. Details of the downward revised financials were not provided.

Target share price revision: ¥4,700 --> ¥4,000 ($40.05 --> $34.09 at ¥117.35/US$1)

Total PS3 operating loss expected over 5 years: ¥738.9 billion ($6.3 billion at ¥117.35/US$1)

The PS3 goes on sale in Japan tomorrow, but there will be extremely tight supplies. A quick sellout will likely make headlines, but doesn't mean much since there will reportedly be only 80,000 units for sale, after a recent 20% cut from 100,000 units. The PS2 sold nearly 1 million units in Japan in the three days following its launch in 2000.

The PS3 launches in the U.S. on the 17th with an available supply of around 400,000 units, although stores have reportedly sold-out of pre-orders.

Sony's CFO recently confirmed the firm still plans to sell 6 million PS3s by the end of next March.

Sony's ordinary shares (Tokyo: 6758) lost 1.48% today to close at ¥4,670 ($39.80 at ¥117.35/US$1). Its ADRs lost 2.71% yesterday, closing at $39.84

http://ce.seekingalpha.com/article/20369

Basically, they say Sony will lose $6.3B during the next 5 years...

[Gegenki]

despite there being hardly any info on playstation network where sony hopes to make most of its money. It also doesnt say what exactly they included or their sources
do they include revnues in that?
Its like my maths teacher said, with statistics you can show anything you want

[Lekko]

you know those number have to not take a lot into account. Simply on the principle that Sony has direct access to their own numbers, ran them themselves, and green-lighted the PS3. I don't think they would look at that kind of loss and say "yup! sounds good to me, go for it!"

[VG Aficionado]

That tells me pretty much nothing. They seem to ignore a lot of factors, so go figure.

[curryking1]

Operating loss does not equal operating net profit

Operating net profit does not always correlate to a company's financial well being, because you can have account payables to you that aren't included in operating costs and profits (Blu-Ray and game royalties???).

Ask all the companies who take large loans Operating in front of profit, gain, whatever, means short term transactions.

In other words, that is a 1 dimensional report of a 10 dimensional study.

[Sephiroth_VII]

Oh my god, not again...

[curryking1]

Guys, don't take the reporters words for this. The person reporting the ML report (lol) doesn't know a lot about numbers. Operating loss, only equals losses that are accounted for in the short term transactions or stuff paid out over 5 years.

How much was the PS2 operating loss? Probably insanely high. 6 billion USD doesn't sound off. But the operating profit and net profits were probably much, much higher. I'm very sure no money was lost on the PS2, that's for sure lol.

Again, the reporter from the site is only giving one variable out of a whole equation. Don't take it for face value. But ML's stock things are pretty extreme.

[Red_Eyes]

...with another prediction. :p



http://ce.seekingalpha.com/article/20369

Basically, they say Sony will lose $6.3B during the next 5 years...

And what about the 10.3B Sony will make back through games, downloads, ads, etc?

[curryking1]

And what about the 10.3B Sony will make back through games, downloads, ads, etc?

Exactly.

[Zer0-Sum]

If it looks like shit, and smells like shit, it MUST be shit.......

[masteratt]

As I said before: Ads on the PS3 will save Sony.
Companies will pay millions to get their ads appearing in the PS3 menu or a PS3 game.
Especially if PS3 sells shit loads like PS2, a company that doesn't want to advertise on that machine is a company that shouldn't be in business.

I am all for this advertisement frenzy Sony will go on as long as I don't see a HD-TV advert in an RPG set in the past or something, which I am sure I won't.
Next time you might wonder "How is Sony providing this service for free?" The answer will always be "Adverts and Product Placements"

[L3XO]

Why would Sony be selling somthing just to make a loss...

[Garfunkel]

I'm not against the ads either, I mean look, if the ads are done right they are not a bad thing at all, look at adsense, which I have on my website (even though they are not that well done lol). the ads are out of the way and don't interfere with your playing/browsing/whatever. In fact if ads are implemented in this way they can be useful (to a certain extent).

I smell BS in this article. Sony will make money on the PS3, just as much, or even more than the PS2/PS1. If they thought they wouldn't make any money they wouldn't be in that market. The SCE division for a long time has been the most profitable part of sony and that will not change until the Sony revival plans are completed.