Friday, October 28, 2005


I've written about this before, but this week's earnings announcements really drive it home.

--sales $14.74 billion.
--net income $247 million.

Without a one-time gain of $637 million related to a pension fund, they would have lost almost $400 million dollars.

The gaming division's operating profit was $71.1 million.

--sales $9.74 billion.
--net income $3.14 billion.

Those results include a one-time charge of $361 million.

The gaming divisions lost $141 million.

That's why Sony is under so much more pressure right now than Microsoft: the PS3 is critical to Sony's bottom line. It's about the only division making money. It's irrelevant to Microsoft's. It's about the only division not making money.

There's a huge difference in the core profitability of the two companies. Sony is involved with a bunch of ephemeral shit like making movies and music--fickle enterprises at best--and their degree of profitability is unreliable. Microsoft makes an operating system that is the standard for the vast majority of the world's computer users.

Sony makes money. Microsoft prints money.

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