Tokyo Stock Exchange drops Sony’s Share price by $US21 per share (Loss of $US 1 Billion) ???

Following a 51% drop in profits which could go even higher – 59% !

by XboxOZ360:

©2008 Grant Smythe:

In a time of economic downturn, seeing any company losing share value on the stock market is worrying enough to say the least. Especially if it is a major one like Sony Corp which was reported by Bloomberg yesterday as having a huge fall in shares (14%). Now we’re NOT picking on Sony right now, so get that out of your heads before going on the offensive. We’re simply reporting the news as it happens regarding a major player in the game industry.

While all have suffered a loss, none have suffered it more than Sony has now. And it looks like it’s not over yet. As Sony’s Seiichiro Iwamoto said , who oversees the $1 billion at Mizuho Asset Management Co. in Tokyo.

“The bad news about Sony hasn’t run out yet, . . . .  Given the weakening euro and possible wider losses on shareholdings, “Given the weakening euro and possible wider losses on shareholdings, I wouldn’t be surprised even if operating profit falls to JPY 100 billion yen ($US 1 bilion) this year.”

That is a worrying statement from any major company, let alone Sony. They lost a huge % and share value of JPY 1,972 (USD 21) which is large on anyone scale. And they predict (Sony) it will go even further, dropping profits to even 59% (currently at 51%)”  And they predict it will go even further, with Sony dropping profits to even 59% (currently at 51%). Their estimated net income will drop 59 percent from last years figures to 150 billion yen ($1.6 billion) in the 12 months to March 31, less than the July estimate of 240 billion yen, Sony said yesterday.

“We see risk of further shortfalls,” Yuji Fujimori, an analyst at Goldman Sachs Group Inc. in Tokyo, wrote in a report today. Fujimori lowered his 12-month share-price estimate by 34 percent to 1,900 yen and maintained his `”neutral” rating.

Following on from that their Chief Financial Officer Nobuyuki Oneda commented that Sony, which earned 77 percent of sales overseas last year, may cut spending and shut some factories to weather “this difficult time.” ….The company intends to come up with reorganization measures as soon as possible”,

Ken K with his

So while their sales have been high, their returns have been low and will remain low with the PS3 dragging them down for the foreseeable future. Even their CEO admitted that making a profit on the PS3 this generation is unlikely. It shows that the earlier over spending by Ken Kutaragi has really hurt the firm – who by the way was “retired” after the fiasco. Some of his mistakes include dropping the initial RRP of the 20 gig PS3, and upping the internals at the same time, against Head Offices direct orders NOT TO DO SO.

His actions, which were against what Sony Heads were saying, have caused huge ramifications for the company as a whole. He basically ignored orders from the very top, the head of Sony Corp worldwide, Sir Howard Stringer, who was brought in specifically to bring Sony back inline and into the black, not the red.

He has succeeded in all areas, with the exception of the Gaming Section due to the earlier blatant disregard for his position, often being referred to as just a Gaijin (outsider … often used in a derogative way at times) . . . and not to be obeyed. So Ken Kutaragi’s team did just that. And it has cost them big time.

The various other sections of Sony all run at a profit, but the Gaming division is dragging them down, and as popular as the PS3 might be, and as good as it might be, they will need to look at some cost cutting in both the machine, jobs and restructuring if they are to weather this storm out.

I only hope they can pull back, as they are a formidable force in the gaming industry, and one that is definitely needed. MS on the other hand did lose some percentage, but far less than Sony, and overall gained with analysts believing they will gain more over the holiday season ahead. Microsoft also has a cash reserve in excess of $US32 billion to bolster the company.

Now these are not the ramblings of a 360 Fanboi, but serious observations from a gamers perspective, so open your eyes ALL gamers, as it affects us ALL, 360, Nintendo and PS3 fans alike.

©2008 Grant Smythe:

Filed under: Console gaming, Editorial, Industry News, Xbox 360, Xbox 360 News Tagged: | Bloomberg report, Ken kutaragi, Sir Howard Stringer, sony share fall