Want to know why your beautiful new PS3 is going to rip $600 out of your cold, dead pocket the day it is released? Because if it doesn't, Sony itself might burn to the ground without a trace. Well, maybe not quite so graphic, but you get the idea.
In a statement released Friday, Sony's senior vice president Takao Yuhara said that the company "might see valuation losses of a size that we cannot laugh away". Basically put, the company might be facing some severe financial losses within the next few months even though they just posted a profit of 32.3 billion yen at the end of the second quarter of 2006. That would be about 230 million euros, around 280 million American, or a little more than the combined gross national products of Chile and Luxembourg. Feel free to measure it however you feel comfortable.
So, if the companies posting such big numbers in the win column, why are there talks of losses in the near future? Because Sony's games division posted huge operating expenses and a 30% drop in revenue for last quarter. One without the other wouldn't be too terrible, but since the operating costs are likely to keep going up as the company prepares to release the PS3 in November then a lack of sales is definitely something to keep an eye on.
And what's more, but not only is the games division hanging by this thread but also the companies movies division, which is practically betting the farm on the success of Blu-Ray, and the company has plans to use the PS3's shiny new cell processor in a great number of its consumer electronics products (although there was no list of these products that I could find). With so many different areas of the company riding on high hopes for this one product, the PS3 needs to be an out-of-the-park home run or Sony might start to reevaluate its position in the video game world.