Sony Q2 profits plummet 94 percent

PS3 delay, battery recall gut-punch electronics-maker's quarterly profits; game division 43.5 billion yen in the red.

Two weeks after Sony revised its annual profit forecast, the company has reported its income for the quarter ending on September 30, 2006. And, as analysts predicted, the three-month period was not kind to the electronics giant.

Sony's net quarterly profit plunged to just 1.7 billion yen ($14.36 million) for the fiscal second quarter from 28.5 billion yen ($240.8 million) a year earlier. However, overall revenue for the quarter rose 8 percent to 1.85 trillion yen ($15.6 billion) from 1.7 trillion yen ($14.4 billion) a year earlier.

How could Sony's income rise and profits fall at the same time? One major factor was its recall of 9.6 million laptop batteries, which cost the company 51 billion yen ($429 million). Another was its game division, Sony Computer Entertainment, which reported a 43.5 billion yen ($367.5 million) operating loss for the quarter. The shortfall was blamed on declining international sales of the PlayStation 2 and PlayStation Portable during the quarter and sliding PS2 game revenue. During the quarter, the company produced 5.02 million PS2s (an increase of 0.01 million units over July-September 2005) and 3.89 million PSPs (an increase of 0.14 million units over July-September 2005).

Sony also said its profit "deterioration was due to recording of charges associated with preparation of launch of the PlayStation 3 platform and the continued high research and development costs associated with the PS3." The next-gen console is set to launch in Japan and North America next month and in Europe in March 2007, but will be available in much lower quantities than Sony originally envisioned.

Sony now predicts an 80 billion yen ($674 million) net profit for the full fiscal year. That figure is 38 percent below the 130 billion yen ($1.1 billion) net profit it had forecast in July. It expects overall annual revenue to rise 10 percent to 8.23 trillion yen ($69.5 billion).

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344 comments
_Sam_
_Sam_

[This message was deleted at the request of the original poster]

Dark_Lord777
Dark_Lord777

is sony hoping to find the Holy Grail or "Treasure of the Knights Templar"? 94% is a big number, I know a good amount of people who are not buying a PS3 because it costs so much. They can't hope to bring back all that money with the PS3. On the other side, $500-$600 is very cheap compared to the $1500 plus blu-ray players. if sony can't get blu ray to succeed, then the PS3 might fail. it is almost as if sony put too much attention into the PS3 and neglected everything else. -Rhyno

mushi799
mushi799

damn perfect time to buy their stocks

FstBrk342
FstBrk342

how sad, and the shortage of PS3s wont help either, i hope its gonna be tough for sony if the PS3 doesnt sell well

ewjim
ewjim

PS3 eat some of money... :P

midway_nights
midway_nights

sony will rise thier profits. i believe in sony's quality and strategy.

SpareJesus
SpareJesus

If I recall, Sony don't make games, they just publish them. I could be wrong, however.

stikasasn
stikasasn

Ok last line says, "It expects overall annual revenue to rise 10 percent to 8.23 trillion yen ($69.5 billion)." but the number above is 1.85 trillion. thats not 10 %, thats a 445% increase.... CALL THE IRS! jk

Nawras
Nawras

OMG... no no, something is DEFINITELY wrong inside Sony... they better try to remedy it ASAP (and I still don't see the point of the PSP)

nutzter
nutzter

Hahahaha you people are crazy PS3 will never make up for all that money the thing is doomed from the beginning ,Im getting one ,dont get me wrong is a beautiful system but is too damn expensive,93% is a lot of freakin money man.They should take care a a bit more and keep selling TV's and Mini components or they will end up like SEGA makin games for xbox 360 and Wii.

cry_wolf121
cry_wolf121

I can understand somewhat of why Sony's profits have droped, I meen, why do they have to releace PS3 at 500 or 600 depending on which verson you buy? Microsoft did it becuse it was the only one out tere so far, but now with PS3 coming out they should make it a little more competive on priceing. Also, I would like to see some of the new games that come out on the new system that would include PSP as I am a big fan of that system and hope that a new one will come out soon.

xfan-atic
xfan-atic

Khoo1992 you must be kidding right? Microsoft as a Software developer is HUGE. I am not ssaying bigger than Sony, but probably the same! Think about all the Software they have to support and realease Yearly Based: Visual Studio, Word, Works, Windows, FireWall, Computer Games, All Windows Applications as Internet Explorer, etc. And thats little, MySql, Oracle compabilities, Access. Managinf a Software giant is much harder than only hardware. Yes, Sony handles Software too, but without counting games is much smaller on that area than Microsoft...

cjcr_alexandru
cjcr_alexandru

94 percent?? Well...that's...a lot. I don't know what are Sony's plans, but let's hope the future will be brighter for them.

legs1986
legs1986

"Think about it, would you run away from a company that's been on top for the past 10 years to side with a company that's still new to the industry (Xbox) or one who's been going down for the past 10 years (Nintendo consoles, handhelds are still the top) just because of a loss that's normal on the eve of any launch?" Nintendo is going down -- they *ALWAYS* post a positive profit margin. Sony's spread themselves too thin trying to control everything, they've gotten to cocky, and it's showing. Nintendo and Microsoft have done just about everything right they could with their respective consoles. i.e. Nintendo could not afford a machine that wasn't profitible off the bat, because they are strictly a gaming company and rely on that for revenue. They are also the obvious choice who would benifit more from inovation than extreme graphics/horsepower. They are also exceeding predictions and expectations at every turn. i.e. Microsoft, after the low performance of the Xbox (in comparison), needed to get out the door first, and do things right to impress people, and they have. Sony - Horrible pr after horrible pr. Not just from their gaming devision either. When the console finally comes out, yes a lot of people who simply want a PS system will buy it. People looking for a blue-ray player will also buy it. Unfortunately for Sony, when millions of parents come in to buy their kid presents and see that 600$ price tag for something they are only buying as a game console.... then they look at Microsoft offering the same quality of game console, for 200$ cheaper, for most parents this becomes a no brainer. Not to mention the parents who look at Nintendo's product, don't have a high-def tv, and see, look decent graphics and 250$. The PS3 will still be successful, and there is no reason to jump the Sony ship I agree with you there; however, they are not going to be the supreme top dog this time around. Their pricing, and their target audience, will prevent that.

Khoo1992
Khoo1992

Sony keep lose to Nintendo and Microsoft, Sony has to look after other products, not PS3

AL13NK1LL3R
AL13NK1LL3R

i dont think that ps3 will make profit for next a year or 2 so yeah...

osxgp
osxgp

The problem I see is that ebay sellers are going to profit from the PS3 for the first year instead of Sony. Sony can not seem to get their act together when it comes to releasing new systems. They should just wait until they have enough PS3 systems availible for launch. Why they do this to themselves I'll never understand. Yeah they want to make this holiday season, but they can't.

mythrol
mythrol

"the ps3 will make up for Sony's loses" - - - Not for the first year it won't. They're going to be selling the console at a loss.

Conceptshado
Conceptshado

Sony has been on top for the past DECADE and you think they need to stop now? Are you kidding? Do some of you know anything about business? EVERY single company takes hits at some point, that doesn't mean the company is dead. I would say every company takes a hit right before a console launches. Like someone mentioned before Microsoft took a big hit w/ 360n defects and other things like production costs and advertisement. In fact Microsoft lost close to (if not) billions with the original Xbox. Sony is still one of the top hardware produces out there with great resources so there's no way it's going out. Every company takes hits and investors no that, it's about the over all picture. Think about it, would you run away from a company that's been on top for the past 10 years to side with a company that's still new to the industry (Xbox) or one who's been going down for the past 10 years (Nintendo consoles, handhelds are still the top) just because of a loss that's normal on the eve of any launch?

pathogenb
pathogenb

Danm_999 "I'm glad PC is my base, because I don't need to deal with this." too bad PC gaming has become more and more a hobbyist market.

draigonthedead
draigonthedead

i doubt it's the end of the Playstations, every company goes through the same things. Look at xbox, recalling there systems cause of fan failure. That's alot of money down the drain but they came with the 360. I know alot of people who play games like NFS and all of that and i believe alot of good titles are coming out at launch or a little bit after launch (you may not like the titles but there is other people in the world that may like them). You also got to think, blu-ray dvd players and such are 1,000 dollars by itself and PS3 gives it to you for 600. Not to mention NVidia supporting the graphics card. All in all they may have had a rough quarter cause of the mess ups but you learn from your mistakes. I do believe sales will go through even with the shortage of the systems. that's my opinion.

kavadias1981
kavadias1981

Cole2026 and crushgoil, Sony do not make any profit on the PS3. It is common knowledge that the PS3 will lose Sony money per sale. It is the software that they will make profit on. But because of the shortage of PS3's, dull launch line-up and the delay in Europe, the sales of software will also be miniscule. Sony may well have to watch their profits plunge even further. I'm not saying it will last. I'm just saying that for the forseeable future it will be rough sea's for Sony.

Cole2026
Cole2026

PS3 will make up for losses. I hope Sony saves itself.

crushgoil
crushgoil

the ps3 will make up for its losses.

manwithnoplan91
manwithnoplan91

friscom99 "Actually, the only games I do play on my psp are *gasp!* SNES and NES games! A lot of people play roms on there PSP, and I just think its the funniest, most ironic thing in the world!" Hmmmmmmm that might actually have just sold me on a PSP lol

friscom99
friscom99

I seriously doubt that this is the 'end of Sony playstation' as most people like to say. Sure, they are hurting, but demand is still very high for PS3, and I already vision all the PS3's on eBay for $3000ish dollars lol. If someone is demanding a console that much to spend that amount of money, then you can imagine how many people want to get their hands on a PS3 at $600. Now I am not a fanboy like people say, hell I own XBOX, PS2, GAMECUBE, PSP, AND DS. I am a fanboy of video games lol. Eventually I'm going to buy an Xbox360 (when Halo 3 comes out), Wii (LAUNCH DAY!) and PS3 (when Final Fantasy XIII releases) no matter what lol and Most of my friends are the same way. Sure we are only like 10 out of millions of gamers, but I can imagine how many people buy all three systems. As for Nintendo making all that profit, its because of me lol jk. Seriously, I been playing my DS a crapload more than I play my PSP. For the record, I dont even own any real psp games cause they don't appeal too much to me (besides Tekken lol I want that game so bad). Actually, the only games I do play on my psp are *gasp!* SNES and NES games! A lot of people play roms on there PSP, and I just think its the funniest, most ironic thing in the world!

Regginator14520
Regginator14520

suomies, i distinctly wrote "SONY Playstation" for a reason. SONY needs to stick to multimedia stuff, and stop making consoles and mistakes.

Migaru
Migaru

Sony is not going to last with the PS3

WisdomLink
WisdomLink

They're taking hits that investors may not like...

suomies
suomies

Regginator, sorry to dissapoint you but Sony will be around for at least a few decades more.

Regginator14520
Regginator14520

thats what sony gets for making half assed products, and then trying to develope a high-end console (Epic recently said that the PS3 can't even run the Gears of War engine, weak...) that will follow the same traits as all Sony hardware. Goodbye Sony, I been waiting to say that for a long time, ever since the great Dreamcast died out.

Blacksamurai87
Blacksamurai87

The PS3 isn't going to bring Bluray to the masses. There are no masses. 400,000 (worldwide) is not enough. But 4 million worldwide is enough to start a 'Revolution', if you know what I mean...

GrimBee
GrimBee

danm_999 i concur! I don't think sony will FAIL, i think its going to create it's own kind of market and go the usual Sony way and make something for itself, alone. Like Minidisc for example. If not, its going to take a few years to start making profit and all that. sony hope to make its profit on bluray royalties too, but if hddvd wins out.. more loss for sony and that little niche will become a standard for them, i think :)

Danm_999
Danm_999

Wow. I'm hearing a whole lot of stupid coming out of both sides mouths. Just shows you the affects of fanboism huh? I'm glad PC is my base, because I don't need to deal with this. That said, I do own a PS2, Xbox and GC. Firstly, to those screaming this is the death of, and bad for Sony, it's really not that significant. The laptop battery recalls and development costs for the PS3 are clearly one time expenditures. And look at the market at the moment, Xbox 360 and DS are virtually without peer, while the PS2 is getting old. Of course Sony is going to be down at the moment! They are in a very weak position, while their competitors are in their strongest! Wait a few more quarters before we start the funeral march. To those defending Sony passionately, you need to realise this is bad news. Sony's PSP seems to be staggering next to the DS, and the PS3 by itself at launch is going to lose more money. Games will turn it around for the PS3, but you can't expect games to be strong at launch, they usually aren't. This is nowhere near the end for Sony, but it could represent a sinister turning point as the market and fate seem to conspire against them. My prediction? Sony will bounce back. But I think the days of Playstation supreme dominance are over. I think the market will shift to a more equitable division, which is good for everyone.

puppiemaster
puppiemaster

Sony had a bad quarter, Microsofts gaming divison loses millions every quarter, only Nintendo seems to make any money out of gaming at the moment

i_like_evil
i_like_evil

And here come the Sony Fanboys... Seriously. Notice how the last few posters who are sticking up for Sony have Sony related avatars... The only way you're going to get on top of this whole convoluted and pointless argument is to speak from a neutral point of view and look outside the box. Sony are doing poorly financially this quater. END OF.

Snakez4
Snakez4

dude thats crazy. sony has to do well with the PS3. AND THEY WILL

Big_Boss2703
Big_Boss2703

I really hate these Sony articles because they give Microsoft fanboys the chance to say "Lawl Sony is teh suxxorz!!!Xbox pwns joo all!!!Master chief rulz!!".And I truly believe that all this hate is coming from the fact that the Xbox was crap compared to the PS2, even though it had all that advanced hardware, the PS2 proving that you don't need a supperior console to make more sales, what you need are GAMES, something which the xbox and the xbox 360 lack.I still believe that the PS3 won't flop and that Sony will land on their feet.

Cubb7
Cubb7

ha ha. its gonna get even worse too when ps3 doesnt do well. o well. i think they have plenty of money anyway.

masterofTS
masterofTS

Everyone picks on Sony when Microsoft is doing that well them selves. Fanboys suck balls.

kingcrowner
kingcrowner

haha pathetic sony. ha, even though they wont care or hear what I'm saying I'm still ranting like the company is some guy i see in the streets really what is up with these kinds of rants!?

snakes2solid
snakes2solid

the ps3 will sell to help the losses..acutally the games will help sales..hehe........but whose gonna buy games without any systems available...lol..----. big giant can't make enough.. lord help them!!!... i'll play my 360. ps2 and psp and ds for now....and when sony gets it's act together..i'll get a ps3..

mc2k4
mc2k4

Sony rocks, the PS3 is dessert.

aRcad33
aRcad33

XBL is actually $4.74 a month i spend more on pop tarts a day///

dragonx500
dragonx500

Ever noticed how whenever somone makes a comment saying that the PlayStation is crap, they usally have Master Chief as their picture and have no sence? most of the xbox fanboys hate sony just because sonys system can match the xbox, and win. xbox doesnt appeal to me, but i dont run around saying its crap without giving logical answers.