VG Aficionado
05-20-2007, 10:15 PM
Sony Says PlayStation Unit Losses to Narrow This Year (Update3) (http://www.bloomberg.com/apps/news?pid=20601080&sid=aKdOGwxvyPMo&refer=asia)
By Hiroshi Suzuki
May 17 (Bloomberg) -- Sony Corp., the world's largest game console maker, said it will cut PlayStation losses by almost 80 percent this year by raising sales and slashing production costs.
The game unit will post about a 50 billion yen ($414 million) operating loss in the year ending March 2008 and turn profitable the following year, Takao Yuhara, Sony's head of investor relations, told reporters in Tokyo today. The median estimate of five analysts surveyed by Bloomberg projected a deficit of 83 billion yen.
Increased demand for PlayStation 3 may help Chief Executive Officer Howard Stringer meet his goal of generating $5 of profit for every $100 in sales to produce record net income. The console has so far been outsold by Nintendo Co.'s Wii, leaving the company reliant on Bravia flat-screen televisions and Cyber-shot cameras for growth.
``The profit forecast doesn't seem to be farfetched,'' said Masafumi Oshiden, a Tokyo-based fund manager at BlackRock Japan Co., whose parent company holds $1.1 trillion in assets. ``A loss reduction in the game business is possible, even if sales underperform. Televisions, which contributed a great deal to earnings last year, should continue to sell well.''
Shares of Sony climbed 2.6 percent, the biggest increase in a month, to close at 6,630 yen in Tokyo. The stock has gained 30 percent this year, compared with the 1.6 percent advance by the Nikkei 225 Stock Average.
Double Profit
Sony yesterday forecast net income for the year ending March 31, 2008 will more than double to 320 billion yen this fiscal year on sales of Bravia TVs and narrower losses at the game unit.
The full-year forecast doesn't include the expected gain from a planned initial public offering of Sony's financial unit later this year, Yuhara said today. He declined to specify how much the gain from the share sale may be.
The company's 5 percent operating profit margin target compares with the 5.1 percent at Osaka-based Matsushita Electric Industrial Co., the world's largest consumer-electronics maker, and 12.7 percent at Apple Inc., the maker of the iPod music players, in their latest fiscal years.
Margins at the consumer electronics unit, which accounted for 73 percent of total sales last year, will reach the ``higher end of 4 percent,'' Yuhara said. The business had a margin of 2.6 percent in the last fiscal year.
The company will start making liquid-crystal display panels at its newest factory by August, in line with an earlier target of starting production by ``summer,'' Yuhara said.
Cutting Costs
Meeting the games forecast may hinge on lower costs at the PlayStation unit, which missed shipment targets. Sony plans to cut spending on semiconductors, including the Cell chip that runs PlayStation 3, by 13 percent to 130 billion yen this year.
``We will promote production cost cuts in chips and other parts used in the game machine,'' Yuhara said. ``We will ask game software makers to make more games for the PlayStation 3.''
The company expects to ship 11 million PlayStation 3 consoles this fiscal year, double the 5.5 million last year, of which just 3.6 million were sold.
Rival Nintendo Co. forecast sales of 14 million of its Wii consoles, almost triple the 5.84 million units it sold in the year ended March 31. The Wii features a motion-sensor controller that allows a user to play virtual games of tennis and bowling, and costs about $250, half the price of the PlayStation 3.
Production delays for PlayStation 3, caused by parts shortages, left Sony in third place in worldwide sales of the newest generation of consoles behind the Wii and Microsoft Corp.'s Xbox 360.
`Resident Evil'
The company in September cut the retail price of the PlayStation 3 in Japan before sales started. Sony also postponed the launch of the game machine in Europe by four months to March, and cut worldwide shipment targets because of the parts shortages.
Ken Kutaragi, developer of the PlayStation game consoles, will step down in June after setbacks.
Profit from the movie division will probably rise 17 percent to 50 billion yen this fiscal year, boosted by ``Spider-Man 3'' and the third installment of ``Resident Evil'' featuring Milla Jovovich in September, according to estimates given by analysts surveyed by Bloomberg before the earnings announcement.
``Spider-Man 3'' had worldwide sales in its opening weekend of $382 million, shattering the previous mark of $253 million set in 2005 by ``Star Wars: Episode 3 -- Revenge of the Sith.'' International receipts from the movie may reach almost $900 million, said Gitesh Pandya, editor of box-office-tracker Boxofficeguru.com.
``Considering that the movie business is volatile and a recovery of the game business may not be quick, the prospect for next year is still unclear,'' said Yasuhiko Hirakawa, who helps manage the equivalent of $80 billion at DLIBJ Asset Management Co. in Tokyo. ``Sony must map out a plan to boost profit.''
By Hiroshi Suzuki
May 17 (Bloomberg) -- Sony Corp., the world's largest game console maker, said it will cut PlayStation losses by almost 80 percent this year by raising sales and slashing production costs.
The game unit will post about a 50 billion yen ($414 million) operating loss in the year ending March 2008 and turn profitable the following year, Takao Yuhara, Sony's head of investor relations, told reporters in Tokyo today. The median estimate of five analysts surveyed by Bloomberg projected a deficit of 83 billion yen.
Increased demand for PlayStation 3 may help Chief Executive Officer Howard Stringer meet his goal of generating $5 of profit for every $100 in sales to produce record net income. The console has so far been outsold by Nintendo Co.'s Wii, leaving the company reliant on Bravia flat-screen televisions and Cyber-shot cameras for growth.
``The profit forecast doesn't seem to be farfetched,'' said Masafumi Oshiden, a Tokyo-based fund manager at BlackRock Japan Co., whose parent company holds $1.1 trillion in assets. ``A loss reduction in the game business is possible, even if sales underperform. Televisions, which contributed a great deal to earnings last year, should continue to sell well.''
Shares of Sony climbed 2.6 percent, the biggest increase in a month, to close at 6,630 yen in Tokyo. The stock has gained 30 percent this year, compared with the 1.6 percent advance by the Nikkei 225 Stock Average.
Double Profit
Sony yesterday forecast net income for the year ending March 31, 2008 will more than double to 320 billion yen this fiscal year on sales of Bravia TVs and narrower losses at the game unit.
The full-year forecast doesn't include the expected gain from a planned initial public offering of Sony's financial unit later this year, Yuhara said today. He declined to specify how much the gain from the share sale may be.
The company's 5 percent operating profit margin target compares with the 5.1 percent at Osaka-based Matsushita Electric Industrial Co., the world's largest consumer-electronics maker, and 12.7 percent at Apple Inc., the maker of the iPod music players, in their latest fiscal years.
Margins at the consumer electronics unit, which accounted for 73 percent of total sales last year, will reach the ``higher end of 4 percent,'' Yuhara said. The business had a margin of 2.6 percent in the last fiscal year.
The company will start making liquid-crystal display panels at its newest factory by August, in line with an earlier target of starting production by ``summer,'' Yuhara said.
Cutting Costs
Meeting the games forecast may hinge on lower costs at the PlayStation unit, which missed shipment targets. Sony plans to cut spending on semiconductors, including the Cell chip that runs PlayStation 3, by 13 percent to 130 billion yen this year.
``We will promote production cost cuts in chips and other parts used in the game machine,'' Yuhara said. ``We will ask game software makers to make more games for the PlayStation 3.''
The company expects to ship 11 million PlayStation 3 consoles this fiscal year, double the 5.5 million last year, of which just 3.6 million were sold.
Rival Nintendo Co. forecast sales of 14 million of its Wii consoles, almost triple the 5.84 million units it sold in the year ended March 31. The Wii features a motion-sensor controller that allows a user to play virtual games of tennis and bowling, and costs about $250, half the price of the PlayStation 3.
Production delays for PlayStation 3, caused by parts shortages, left Sony in third place in worldwide sales of the newest generation of consoles behind the Wii and Microsoft Corp.'s Xbox 360.
`Resident Evil'
The company in September cut the retail price of the PlayStation 3 in Japan before sales started. Sony also postponed the launch of the game machine in Europe by four months to March, and cut worldwide shipment targets because of the parts shortages.
Ken Kutaragi, developer of the PlayStation game consoles, will step down in June after setbacks.
Profit from the movie division will probably rise 17 percent to 50 billion yen this fiscal year, boosted by ``Spider-Man 3'' and the third installment of ``Resident Evil'' featuring Milla Jovovich in September, according to estimates given by analysts surveyed by Bloomberg before the earnings announcement.
``Spider-Man 3'' had worldwide sales in its opening weekend of $382 million, shattering the previous mark of $253 million set in 2005 by ``Star Wars: Episode 3 -- Revenge of the Sith.'' International receipts from the movie may reach almost $900 million, said Gitesh Pandya, editor of box-office-tracker Boxofficeguru.com.
``Considering that the movie business is volatile and a recovery of the game business may not be quick, the prospect for next year is still unclear,'' said Yasuhiko Hirakawa, who helps manage the equivalent of $80 billion at DLIBJ Asset Management Co. in Tokyo. ``Sony must map out a plan to boost profit.''