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.
Best of the Blogs
Scanning and identifying the best blog entries every hour
- Driverless Vehicles Coming Faster than You Think | Financial Sense
- Meanwhile, At The White House... | ZeroHedge
- NSA Whistleblower: US Intelligence Worker Likely Behind DNC Leaks, Not Russia | ZeroHedge
- Trump Lays Out His Plan For First 100 Days In Office: Here Are The Highlights | ZeroHedge
- A Realist's View Of The US Presidential Contest | ZeroHedge
- AT&T Agrees To Buy Time Warner For $80 Billion In Biggest Media Mega-Merger In Years | ZeroHedge
- The Global Economy Is Collapsing | Financial Sense
The most relevant financial news and articles from the Internets
- This is the best electric wine aerator you can buy, according to the founder of a popular wine startup | Business Insider
- 'Mr. Trump, would my son have a place in your... | Business Insider
- THE CONNECTED CAR REPORT: Forecasts, competing technologies... | Business Insider
- THE... | Business Insider
- The White House burned a Philippine official... | Business Insider
- Virginia Town is Best Place in the U.S. to Raise Kids | BusinessWeek
- 2 millennials watched the original ‘Star Wars’ for the first time | Business Insider