PSP News: Sony Posts Q1 Fiscal Results - PSP News

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Sony Posts Q1 Fiscal Results

It's a bit much to go over the whole Yahoo! Business article, so here are the results from the Game sector:

Unless otherwise specified, all amounts are on a U.S. GAAP basis.

Sales decreased 29.1% compared with the same quarter of the previous fiscal year (a 32% decrease on a local currency basis).

Hardware: There was a decrease in sales as a result of lower PS2 and PSP unit sales compared to the same quarter of the previous fiscal year when there was continued strong demand for the new PS2 model. On a regional basis, sales increased in Europe, but decreased in Japan and the U.S.

Software: Although sales from PSP software increased compared to the same quarter of the previous fiscal year, overall software sales decreased in Japan, the U.S. and Europe mainly as a result of a decrease in sales from PS2 software.

The amount of operating loss increased by Y20.9 billion compared with the same quarter of the previous fiscal year. This deterioration was due primarily to the recording of charges associated with preparation for the launch of the PS3 platform, in addition to continued high research and development costs associated with PS3, although combined profit from the PS2 and PSP businesses was relatively unchanged.

Worldwide hardware production shipments:*
-> PS2: 2.54 million units (a decrease of 0.99 million units)
-> PSP: 2.02 million units (a decrease of 0.07 million units)
Worldwide software production shipments:*
-> PS2: 33 million units (a decrease of 2 million units)
-> PSP: 9.1 million units (an increase of 4.2 million units)

*Production shipment units of hardware and software are counted upon shipment of the products from manufacturing bases. Sales of such products are recognized when the products are delivered to customers.

Inventory, as of June 30, 2006, was Y122.0 billion ($1,061 million), which represents a Y37.9 billion, or 45.1%, increase compared with the level as of June 30, 2005. This increase was primarily a result of the worldwide full-scale deployment of the PSP platform. Inventory, as of June 30, 2006, was a Y10.5 billion, or 9.4%, increase compared with the level as of March 31, 2006.

In summary, overall profits for Sony's Game division are down compared to Q1 2005, despite an increase in software distribution for the PSP. One of the likeliest factors is the lackluster post-March release list for both of Sony's current platforms. Neither system received any truly major titles by the end of June, making the market ripe for sales of Nintendo's DS Lite.

Profits (at least for Sony's existing hardware) are obviously expected to increase as the fiscal year marches on and we enter the holiday season. Though the video games division of the company is seeing losses, Sony posted an overall net profit of $278 million - a definitive increase over last year. Credit goes to factory closures and strong sales of the Bravia line of televisions as well as Cyber-shot digital cameras.

7/27/2006 Cavin Smith

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