So let me start off by saying that my father works in the semi-conductor business and due to his close relations to Sony he eventually became an investor of Sony Corp. Recently times have been tough for the company, so in a recent financial report which was issued to investors like my father in mid-March, Sony addressed the concerns of investors as well as reported the financial condition of the company.  I however did not see this document until yesterday when I saw it ontop of the paper work for my father's mutual fund. This report is not a secret, it is open to the public as well as Howrad Stringer's letter to investors on Sony's website and you yourself can examine this report here.

The Numbers

The times are tough, let's just get the point across before anything else is said. But still most of Sony's financial numbers are terrible. For a company that's heavily invested in electronics, this economic downturn has not been good for most of the divisions of Sony Corp. However it's worth noting that Sony's competitors such as Panasonic and Philips have posted similar, and in some cases worse, financial reoprts.

Sony Corporation

Change in total revenue and sales by -12.9%; Operating Income Net Income of -$1,010 million

But let's look at the various divisions of Sony to see what's really causing Sony to see a lot of red these days.

The Divisions of Sony

Sony Electronics

• Change in sales of -17.0%; operating income of -$1,715 million

Reason for losses: Appreciation of the yen versus the (U.S.) dollar and euro; decrease in sales for Handycam, Cyber-shot, and VIAO PCs; and Sony's exit from the LCD rear projection and CRT TV markets.

Sony Computer Entertainment

• Change in sales of -18.0%; operating income of -$597 million

Reason for losses: Appreciation of the yen versus the dollar and euro; decrease in PS2 hardware and software sales (the PS3 was the only console and Sony platform that saw an increase in software unit sales)

Sony Ericsson

(Sony only owns 50% of Sony Ericsson, therefore it is not posted or a part of their financial forecast or report)

• Change in sales of -19%; net income of -€489 million

Reason for loss: Fewer units sold due to economic slowdown, less favorable product mix and price pressure (some product aren't being well recieved), the recording of restructuring charges.

Sony Pictures Entertainment

• Change in sales of -16.4% (this places them in third place behind Viacom and Time Warner, who are second and first receptively); operating income of +305 million

Reason for decrease in sales but stable operating income: Lower home entertainment revenues of new releases, prior years success was due in large part to the sale of KirchMedia's (a licensee company) bankruptcy claim, however TV revenues increased due to a spike in advertisement support on Sony based channels.

Sony Financial

• Change in sales of -7.4%; operating income of -$318 million

Reason for losses: A decrease in revenues in Sony Life and Sony Bank due to the losses on convertible bonds and equity credit (e.g. they're banks trying to conduct business in a very unfortunate climate)

Sony Music Entertainment and all other Sony services

• Change in sales of +41.2%; operating income of +$310 million (this is a -50.1 change in income from last year)

Reason for steady sales but a decrease in operating income: Sony fully acquired BMG and consolidated it into Sony Music Entertainment, the dercease in operating income in attributed to last years sale of Sony's complex "The Sony am Postdamer Platz," in Berlin and settlement  and payment of coypright infringement  claims (i.e. last year was really good for them)

Forecast and Outlook for the Next Fiscal Year

1. Sony hopes to minize their drop in  total revenues and sales, from -12.9% to -6%.
2. For Sony Electronics, the company plans on cutting the manufacture cost of some of their HDTV division, but the division expects losses to continue to climb into 2010
   
3. Sony Electronic Entertainment plans to minimize losses by increases the profitablility of the PS3 by increasing software quality for the platform, but a loss is still expected for the division (the division has been operating at a loss for a while...it's not going anywhere because of this bad year)
   
4. Sony Pictures plans on increasing the amount of ads on the international channels and maximizing subscrition fees (possible price hike on subscription fees for , they plan to maintain a positive operating income despite the economy and lossing their market share to Viacom and Time Warner.
5. For all of Sony's financial services and banks...Sony cannot predict what the financial market will be like in a year

My Cautionary Statement

Sony then goes on to issue a statement to investors essentially assuring them that despite their losses that they turn everything around--and I believe them. With Sony wer are talking about one of the largest multinational-mutli media-conglomerates...I doubt that they'll just disaapear due to a bad year. But let me just tell you that I wouldn't recommend in investing in Sony right now, it looks like it going to be while, Sony admits they are still going to be posting a loss in 2010, until they turn things around.