Sony Corp.'s PS3 a Big Hit, Also a Big Cost (SNE)

Sony Corp. (NYSE:SNE) PS3 Slim with the Blu-Ray player, free internet connectivity, and 120GB can be picked up at Best Buy (NYSE:BBY) for $299.99.  But despite all the features, last month the Wii and XBOX 360 consoles beat the PS3 in sales, and the PS3 is not a big money maker.
Each PlayStation 3 sold in the United States nets the company $31.27 less than its materials and manufacturing costs.

The NPD Group reported November's U.S. hardware sales numbers as follows:

Nintendo DS - 1,700,000
Wii - 1,260,000
Xbox 360 - 819,500
PlayStation 3 - 710,400
PSP - 293,900
PlayStation 2 - 203,100

Total hardware sales were $1.05 billion. That's a 13.4% drop from November of 2008, when all three consoles were considerably more expensive.

Via GamePro.com -- According to market intelligence firm iSuppli, Sony Corp is still losing money on PlayStation 3 hardware, despite the recent shift to the "slim" version of the hardware. "Since the introduction of the PlayStation 3 in late 2006, Sony has subsidized the price of every console sold, a deficit the company has made up for with game sales and royalties," said Andrew Rassweiler, director and principal analyst, teardown services, for iSuppli.

"However, with each new revision of the game console hardware, Sony has aggressively designed out costs to reach the hardware and manufacturing breakeven point as quickly as possible. The latest version of the PlayStation 3 manages to further reduce the loss, even with the U.S. price of the console having fallen by $100 during the past year."

Sony Corp shares are doing just fine however, today they closed at $28.99 and have a 52-week range of $15.64 to $30.82.

You can't buy Sony shares based on the PS3 alone, its a mammoth company with a 29.09 billion market cap. Sony operates in five segments: Electronics, which develops, designs, manufactures and sells electronic equipment, instruments and devices for consumer and professional markets; Games, in which Sony Computer Entertainment Inc. (SCEI) develops, produces, markets and distributes PlayStation 2 (PS2), PSP (PlayStation Portable) (PSP) and PLAYSTATION 3 (PS3) hardware and related software; Pictures, which encompasses motion picture production and distribution, television production and distribution, and digital content creation and distribution; Financial Services, which includes the activities of Sony Financial Holdings Inc. (SFH), and All Other, which comprises Sony Music Entertainment (SME) and Sony Music Entertainment (Japan) Inc. (SMEJ).

Mastery advice -- forget the stock, just take advantage of the PS3 price cut.

Disclaimer: No positions in any of the securities mentioned in this publication.