Why do corporations keep pushing until they break?

I realize corporations are made up of employees who want a paycheck and investors who want to enlarge their bank accounts, but I don't understand where SONY freaking went with the money they made from their device that broke sales records by being the most purchased console in history, by a large margin (Playstation 2), and that recently they had to close a major department, cut back on employees, and they spend tons trying to make their current gaming device compete. Where the fuck did the PS2 fortune go then?

I also don't understand THQ's move.

I mean, these are companies that do well, extremely well, they make billions, but how many billions are enough for them to be satisfied and just take a break from investing MORE money into things that could fail? At least for a while? A month? A day?!!

It doesn't seem that these companies want to make profit. They don't want to make money, they want more money. It seems they just want more of whatever they have. Their goal is to make more. Can someone make some sense out of this?

Sony does a lot more than just the PS3 anv Vita, and while I'm sure they divide departments that PS2 money is still going to other things. Not to mention that the PS3 (and the 360 and every console in this generation) sells at a loss for a really long time.

Can someone make some sense out of this?

Yes. These people are called "accountants", and their job is to keep track of what money goes where.

Anyway, a business's job is to keep money flowing, not to keep it put back in a banking account somewhere. A business grows by making more money than they spend, yes, but whatever they make goes into next year to (hopefully) make more money. This is a line of thinking that I never fully comprehended - who in their right mind says that putting some of your profits back in case of an off year is a bad idea, for anyone or any entity of any sort?

As for Sony, they make way more than just the PS2, 3, and Vita. Remember that they also make TV's, DVD/Blu-ray players, computers, etc. They were also really pushing 3D and general opinion on that seems to be "cool, but not new TV cool". A lot of the money they made during the PS2's heyday probably went into keeping the PSP and PS3 afloat for a few years as well as other projects.

Historian's fallacy combined with "getting lots of money doesn't mean you're actually making a profit". Also, this is generally just a really poor argument.

If you are a public company you have to invest the money you get or give it back to the shareholders as a dividend. You can't just sit on the money pile - unless you are Apple I guess, but even they are getting stick when the share price dips.

As to Sony. SCE has always done okay but they are a conglomerate and other divisions have been losing money at a much faster rate.

I am afraid your categorization of shareholders and investors as greedy is a little naive. If your pension fund doesn't perform then I don't think you are going to accept "we wanted to be a bit nicer to the corporations" as an excuse.

When it comes to technology/electronics companies, I think it's fairly obvious that if they don't fairly frequent risks there won't be much reward in the first place. That industry moves so quickly nowadays that if you don't make some effort at innovating or keeping up with it you're going to be left behind.

Also, like @Video_Game_King said, getting lots of money doesn't mean you're actually making a profit.

@OfficeGamer said:

I realize corporations are made up of employees who want a paycheck and investors who want to enlarge their bank accounts, but I don't understand where SONY freaking went with the money they made from their device that broke sales records by being the most purchased console in history, by a large margin (Playstation 2), and that recently they had to close a major department, cut back on employees, and they spend tons trying to make their current gaming device compete. Where the fuck did the PS2 fortune go then?

I also don't understand THQ's move.

I mean, these are companies that do well, extremely well, they make billions, but how many billions are enough for them to be satisfied and just take a break from investing MORE money into things that could fail? At least for a while? A month? A day?!!

It doesn't seem that these companies want to make profit. They don't want to make money, they want more money. It seems they just want more of whatever they have. Their goal is to make more. Can someone make some sense out of this?

What are you saying? Companies should just shut down after a major success? You're wondering why they bothered with the PS3 since the PS2 sold so well? I'm not even sure what department you're talking about them shutting down. The last major factory they closed made camera lenses. Do you expect the PS2 sales to give them unlimited funds to run every other aspect of their company?

When has THQ ever been a company that has done extremely well? When did they have billions in the bank?

You seem to have the impression that the internet start-up is the only business model anyone should follow.

I think with Sony its been a number of different things. For one the markets of many of their products have changed. The iPod killed the portable CD player. The TV market is real weird now and the few PC's that Sony made have been rendered mostly obsolete by a growing trend to tablets instead of desktops a market again that apple owns. Honestly if it wasn't for their games division they might have completely died already. Also dont forget the many legal battles Sony has been involved in over the past 10 or so years.

@Hunkulese: Dont forget that as soon as that start up makes anything, they should shut down and be happy.

@OfficeGamer: Businesses, specifically those making products, do not exist to simply hold the money they've made. They use that money to make sure they can continue to grow, pay the bills, pay employees, and put out more products. By your logic THQ should have shut down when they made some money on the wrestling games. They took massive risks on things like Saints row, red faction, Relic's RTS games, etc. Each of these is a multi-million dollar risk. Their dumb tablet was the same, a risk, but this time they came up on the losing end of the gamble.

If you're curious where the money went OP, you can probably read SONY's annual report. Companies in the US have 10-K annual reports they have to file with the SEC, I'm sure a publicly traded japanese company has a similar report that can quench your thirst for answers.