How's Sony Doing Financially Now That the PS4's Out?
Posted by Sammy Barker
Well, the only way is up
There’s good news for Sony overlord Kaz Hirai: the PlayStation 4 is selling spectacularly. Not even the most optimistic of industry analysts could have predicted that the next-gen system would sell over seven million units in its first six or so months on the market, but that’s exactly what it’s achieved, and it’s showing no signs of slowing down. Alas, the bigger picture isn’t brilliant for the Japanese giant.
In a move that’s sure to have added a handful of grey hairs to the abovementioned executive’s perfectly groomed head, the firm has warned that its financial loss for the 2014 fiscal year will be significantly worse than it touted in February, totalling a terrifying ¥130 billion ($1.27 billion). That’s an increase of around 18 per cent, as the company originally expected a substantial loss of ¥110 billion ($1.07 billion).
So, what’s gone wrong this time? Well, you may recall that the manufacturer opted to sell off its Vaio business earlier in the year. However, sales in the interim have been slower than anticipated, with the organisation being forced to compensate suppliers for unused components and excess inventory. This will cost the company a whopping ¥30 billion ($293 million), which is a sizeable chunk of change.
The good news is that the firm expects to offset these charges next year, as it’s getting restructuring costs out of the way early. However, in all of our time reporting on PlayStation, we feel like we’ve heard the manufacturer say this several times, and it nearly always manages to result in more losses. Another issue it’s facing right now is a contraction in physical media sales, which is hurting its disc manufacturing business.
Despite all of this, though, there are glimmers of hope. The profit warning may read disastrously, but the company has actually seen a 14 per cent increase in sales year-over-year. It’s also worth remembering that, as already mentioned, the PlayStation business is doing very well, reporting a profit of $172 million at the end of December. There’s no reason to believe that that won’t continue over the coming year.
As such, it’s the colossal scale of the company that’s continuing to bring it down. Since taking the reins of the Japanese giant a few years back, Kaz Hirai has been eager to trim the fat, selling off buildings, businesses, and unnecessary assets. From what we can tell, the firm is heading in the right direction – operating costs have been cut significantly over the past few years – but there’s still a lot of work left to be done.