Source: Financial Times, Wednesday January 31, February 19, 2007
Games division weighs on Sony
Sony suffered a -15 per cent fall in third-quarter profits after heavy losses at its games division offset strong pre-Christmas sales at its core electronics business. But the group raised its earnings forecasts for the full year.
The strong showing in electronics persuaded some analysts that the group may have finally begun its long-awaited turn round.
However, it gave no solace to video games fans hoping for price cuts to the PlayStation3 console, which Nobuyuki Oneda, the company's chief financial officer, said would remain at its current price of Y59,900 (€ 380) for 'two or three years'.
On a consolidated basis, Sony posted quarterly operating income of Y178.9bn, a year-on-year drop of 14,9 per cent.
Electronics sales in the October to December quarter were driven by particularly strong performance for Bravia televisions, which have established a strong foothold in the $63bn global market for LCD TVs.
A large contribution also came from sales of digital cameras and video cameras, both of which achieved profit margins of more than 20 per cent.
The forecast included Y51.2bn provision for expenses arising from its massive recall of laptop PC batteries last autumn.
However, larger-than-expected losses at Sony Computer Entertainment, the division that produces the PlayStation3 console, left analysts sceptical.
Quarterly operating losses of Y54bn at the games division reflect the high development cost of the machine, which is already being discounted by some Japanese retailers because of sluggish sales.
Although the group claimed it was making progress in efforts to reduce the size of the PS3's cell chip, the corresponding cost savings would probably not be passed on to customers until at least 2009.
Describe the type of organizational structure Sony has at this moment.
What does the concept of synergy mean in the Sony case?
What type of interdependencies are there between the several Sony divisions?
Could Sony split off its games division? What would happen?
How would you characterize Sony's overall strategy? Which type of strategic options are combined in Sony's overall strategy?
Does the organizational structure reflect the strategic profile of Sony?
What (other) type of organizational structure fits best to Sony's strategy?
Sections 5.3, 5.3.1-5.3.6
financial audiovision Sony