News of Sony’s financial woes aren’t new with the previous supreme leader of electronics having been in financial straits for a few years now but according to some new research the company may be in more trouble than we originally thought.
According to Macroaxis the electronics firm has a 79% (actually 78.49%) chance of going bankrupt in the next two years.
Now I don’t have much financial knowledge so I won’t even try and understand how they work this out but if you want to read all the details you can do so right here.
Seeing as we only care about the video game aspect I took a look at their two console competitors
Nintendo, for all their Wii-U woes, currently has a 22% chance of bankruptcy in the next two years. This is likely because they have very little debt and a huge war chest from the success of the Wii. Not to mention the current success of the 3DS.
On the other hand no one is more comfortable than Microsoft who are sitting with a 1% chance of bankruptcy in the next two years. Granted Microsoft is an entirely different beast and the fact that Microsoft won’t fail in the next two years doesn’t necessarily mean that the Xbox division won’t be closed down.
While at the same time Sony may in deed fail but I can’t see the PlayStation brand not living on in some form or another, especially with the success of the PlayStation 4 launch.
Market Cap
When we look at market cap, company worth, things do look a little different but it gives you some indication of the size of Microsoft compared to the other two.
- Sony – $17.8 Billion
- Nintendo – $2.12 Billion
- Microsoft – $310.21 Billion
This is why Microsoft’s billion dollar write off in the last generation didn’t even make a blip on their financial radar and also goes some way to explaining their arrogance. They may feel they are untouchable.
Last Updated: January 3, 2014
Umar of The Rebellion
January 3, 2014 at 10:31
Meh I don’t buy it. Using some financial tool. Has any other company gone bankrupt predicted by this tool?…call bs
Though Sony are struggling though. Think they need to reshuffle their focus a bit
JJ's horrible secret (John)
January 3, 2014 at 10:43
They’ve been so busy kicking MS arse that they’ve forgotten to look at their numbers. Trolololo
Sageville
January 3, 2014 at 10:50
Worst case scenario, they close shop on some of their less profitable sections… hopefully the Gaming section is looking profitable since Console Wars win.
Weanerdog
January 3, 2014 at 11:43
The Z score of higher than 90% are considered high risk therefore 79% is not considered high risk, it is not a probability of 79% merely a score of 79% which the company has published as a risk number to look cool and get more hits. Sony are not looking financially well off with a 79% z-score and indicates that there may be a problem but you need to do more than a z-score to figure out if it is indeed a problem or what the problem is and how to fix it although selling more TVs and cutting production costs might be a good start.
Bruce S
January 5, 2014 at 20:49
You click on the link now and the risk has dropped to 46.22%. Huh?
Martin du preez
January 3, 2014 at 10:52
We’ve been hearing “Sony is d0o0o0omed” for what,10 years now?
Walter
January 3, 2014 at 11:51
But they are definitely suffering. People should actually support them by buying their (awesome) products..
Baconcheese burger
January 3, 2014 at 12:39
they should make these “awesome” products then
Walter
January 3, 2014 at 17:00
Yeah, you’re right, they don’t have any… Except for the multiple camera-of-the-year award winning RX-100 cam. And the multiple camera-of-the-year award winning A7R cam. And the PS1/2/3/4.. And the EISA tablet-of-the-year award winning Tablet Z. I could carry on but there is just too many…
But other than great cameras/video cameras/security cameras/tablets/consoles/4K projectors/TV’s, they really don’t have anything.
Baconcheese burger
January 3, 2014 at 18:50
not for me
Walter
January 3, 2014 at 19:29
That doesn’t make the products any less awesome..
Hammersteyn
January 3, 2014 at 10:53
Playstation will live on as long as they care about gamers as much as gamers cares about them.
RinceGivesRspectsToMadiba
January 3, 2014 at 15:45
What you said! And happy new year! Back to the stip-joint batcave now!
Hammersteyn
January 3, 2014 at 18:28
Same to you bud, need to hit CT again. Maybe when the bulls try their camouflage tactics against the Stormers.
teddy
January 3, 2014 at 10:59
Japanese government are master money printers. They wont let Sony fail.
Same as so many of their businesses.
Pieter Kruger
January 3, 2014 at 11:06
According to Forbes Sony is going to become a major partner, yes that’s “PARTNER”, in MS’s mobile phone expansion in 2014. Not sure how that’s going to work exactly but Sony could use this cash injection……
Gavin Mannion
January 3, 2014 at 11:10
Well Samsung is a major partner with Apple iPhones… corporate workings are weird
Hammersteyn
January 3, 2014 at 11:13
That hasn’t stopped IPhone and Samsung from suing each other.
Ultimo_Cleric N7
January 3, 2014 at 11:46
Doubt it will make that much of a difference. The major losses for Sony are coming from their larger electronics sales (Eg TV’s, DVD, etc) Also, last time I checked their movie production house was also taking a nosedive. If the new Spiderman movie doesnt do well, they are in huge kak.
Ultimo_Cleric N7
January 3, 2014 at 11:42
Macroaxis is a really good website for looking at company liquidity as well trading information. While I am not too sure about this Probability of Bankrupcy figure, it is based of a figure called the ‘ Altman Z – Score’.
The Z Score ratio is a widely used and tried & tested indicator of how well a company is performing (with the exception of Financial companies). Sony has a score of only 0.6, which is pretty damn bad. Really. I havent sudied the figure that much, but after a little research the latest sample (2010 in New York) shows that 74% of companies with a score lower than 1 filed for bankrupcy within 2 years… While this doesnt neccessarily mean Sony WILL go bankrupt, there is a very good chance unless there is a huge inflow of money.
I also think that Playstation as a brand is far too big for things to go really south though. The entire gaming department will probably be sold to someone else. I cant see anything more than a loss of hardware/software support for the gaming units for a few months.
HOWEVER, the worst case scenario is that the entire department is split up and sold off seperately to pay for bad debts or share holders. While its a very small chance, its not impossible. Just look at how EA have been treating gamers and you get the picture. Its not about gamers, its about the cash.
Gavin Mannion
January 3, 2014 at 11:45
Thanks for adding in some clarity
Ultimo_Cleric N7
January 3, 2014 at 11:50
No prob Gav
RinceGivesRspectsToMadiba
January 3, 2014 at 15:46
Are you like, a wolf… In like, Wall Street? 😉
Jim Lenoir (Banana Jim)
January 3, 2014 at 16:00
I know who I’m going to make Minister of Finance…. for my micronation
RinceGivesRspectsToMadiba
January 3, 2014 at 16:04
The one that exists on a USB stick? BWAHAHAHA! Happy New Year man/girl/bot 😉
Jim Lenoir (Banana Jim)
January 3, 2014 at 16:17
It’s real damnit! It’s REAL!!
RinceGivesRspectsToMadiba
January 3, 2014 at 16:24
It MAY be… But we know YOU are not! *RUNS
VampyricSquirrel Monk
January 3, 2014 at 16:21
Just throw a brick at him Jim… normally helps…
RinceGivesRspectsToMadiba
January 3, 2014 at 16:23
Oi! I am still in no trousers 😛
VampyricSquirrel Monk
January 3, 2014 at 16:24
Throw two bricks in that case… and some pants…
Jim Lenoir (Banana Jim)
January 3, 2014 at 16:23
Happy NEW YEAR TO YOU! YOU CRAZY OLD SOCK!
Hammersteyn
January 3, 2014 at 18:29
I think he’s related to Charlie Sheen who played in the movie Wall Street.
Ultimo_Cleric N7
January 10, 2014 at 13:26
Winning
Repline
January 3, 2014 at 22:03
I didnt have a look at the Z-Score calculations of Sony however it works on probability and probability in this case might me misleading.
Sony has probably had huge Research and Development costs in the past couple of years due to the development of the PS4, and possibly now the production of the PS4 units with only it’s current (pre-ps4) sales to cover those costs, so logically the z-score would look bad. What would be interesting to see is what happens to this score now that the PS4 is selling and if it would have any large implications, which would probably take some time to start showing.
Ultimo_Cleric N7
January 10, 2014 at 13:26
While I agree with the R&D costs, we are not just talking about Sony Interactive here. Its the entire company. Its their under performance in appliances that are causing the issue.
Willem Swanepoel
January 3, 2014 at 11:42
That boggles my mind. A company with so much capital but they release a far inferior console than Sony which is 20 times smaller …
I do not get it ..
Sentinal_Slug
January 3, 2014 at 11:57
i am a sony fan boy but i dont feel that the Xbox one is inferior, i think a lot of hype has gone into painting it as such, and microsoft itself hasn’t really helped the image either. It’s definitely BIGGER though AND comes with a massive power brick which is odd…. although I do understand the importance of power supplies when it comes to graphic performance it has always boggled me that sony has never needed a power brick. or has it boggled me that Xbox has? I’m not sure but i wish I understood the rational behind it better.
Robert Hart
January 3, 2014 at 13:34
PSU has nothing to do with GPU performance. Its not hard at all to supply enough juice to power the system. Sony also has one as well except they integrate it into the console like the PS3.
SPONGEGUMS
March 8, 2014 at 07:35
“Far” inferior? come on fanboy.
Willem Swanepoel
March 8, 2014 at 10:36
LOL, i do not even own a Playstation device … but i am a fanboy ROFL. Come on silly guy
SPONGEGUMS
March 8, 2014 at 23:28
You sound like when when you make stupid comments like the one you just made.
Willem Swanepoel
March 8, 2014 at 23:46
Keep quiet troll and go back to your stupid bridge. We are over this topic 2 months ago. Just keep quiet, dont have the energy for annoying people like you.
Walter
January 3, 2014 at 11:50
Well.. I’m doing my bit: bought a very nice Sony camera and a Walkman for Christmas gifts this year.. I actually forgot how much I like Sony products till I got the Xperia Z earlier in the year.
Sentinal_Slug
January 3, 2014 at 11:51
I’m pretty sure the intricacies of Sony’s financial stature are more detailed than this…. And haven’t we been hearing this for years now YEARS. They are not going bankrupt, which is why they are still one of the market leaders in many different sectors of the electronics industry… Shit everyone seems to know the financial status’ of the biggest companies on the planet, as if they could be run from some laymen’s living room, living room economics. Shit we heard this when the Paystation 3 was being released as well. Tiring.
Mathias
January 3, 2014 at 12:34
I hope it dies. And when they’re reborn they turn their attention to PC and fuck PS3Japan only exclusives.
Robert Hart
January 3, 2014 at 13:39
Sony will probably just continue to shut down unprofitable ventures until it is in a good place again. Very little research had to go into this Gen of console due to the PC likeness. All they really had to do was develop the OS. Most of their research was already done in the massive tech jump from the PS2 to the PS3. The PS4 is a compact PC with a proprietary OS.
Jim Lenoir (Banana Jim)
January 3, 2014 at 16:15
Pretty much.
UltimateNinjaPandaDudeGuy
January 3, 2014 at 13:58
It comes down to giving people what they want and making sure people know you have what they want.
Samsung does this very well. They make a product of good to high quality and sell it at a decent price. They have adds all over the place.
I think Sony can learn from them. I LOVE Sony products, but they are more expensive. Are they better quality? Probably yes. Do people really care? Probably not. People look at prices. Sony and Samsung (according to the average buyer) have the same products in features and quality. So what do you end up with? PRICE and in some cases warranty, but PRICE is king here.
I hope Sony makes it, because I always like competition in the market. They have some changes that need to be made though.
Jim Lenoir (Banana Jim)
January 3, 2014 at 15:50
Can you imagine a scenario where the only hardware maker is Microsoft? They would probably kill gaming, or at least force most of the core out with their anti-consumer, anti-gamer nonsense. I actually can’t imagine a more depressing scenario then Microsoft standing alone.
I think I’d probably give up gaming or just become a retrogamer.
Dakan45
January 3, 2014 at 16:00
yeah its not like sony tried to do that with ps3, they both suck, they are not your friedns they dont care about you.
Steambox anyone? Valve has yet to screw anyone.
Jim Lenoir (Banana Jim)
January 3, 2014 at 16:04
They did screw us over by forcing Steam on us through Half Life 2. I still remember what a royal pain it was. Of course, they’ve course-corrected so perfectly, that it’s hard to imagine PC gaming without Steam. I guess therein lies the biggest con,
Walter
January 3, 2014 at 16:48
I still had a 56K connection at that time. Bought the game, installed it, couldn’t play it without the forced update that took the whole weekend to download. Then played it once and gave it away. I won’t ever supoort Steam/Valve in any way or form again if I can help it.
Dakan45
January 4, 2014 at 08:01
agreed
Dakan45
January 3, 2014 at 15:59
Ms 234.83 Billion $ stocks 37.16
Sony 17.6 Billion $ stocks 17.16
Nintendo 14.39 Billion $ stocks 16.55
Intel $105.72 Billion $ stocks 25.79
Nvidia 7.79 Billion $ stocks 15.86
amd 5.73 Billion $ stocks 3.95
Who
do you think is gonna lose? Intel and nvida are the giants in hardware
they cant die, amd can see they are both amd and radeon together to
form a competitive force.
Ms and sony have other stuff going aside from gaming, that gets them money.
If amd didnt get the deal they were screwed.
Nvidia is pretty much who posses graphics forwards and intel pushes processing power.
Nintendo is slowly becoming irrelevant but thanks to wii sales they can manage to make good games for wii u
Sony had DOUBLE the losses on ps3 from what ms had from x360
sony
is making a profit with ps4, ms sells it at a loss. Sony has closed
down many divisions and its betting on ps4, ms barelly cares about xbox
one.
Jim Lenoir (Banana Jim)
January 3, 2014 at 16:14
Comparing the numbers do give you a glimpse at the reality however, there’s more to it then merely looking at total net worth. One of the biggest challenges for Microsoft is their shareholders and the growing internal discontent with the Xbox brand. Now sure, Microsoft could throw money at the xbox division, but if I’m a shareholder, and I have an expectation of annual returns (profits), and those aren’t met, then regardless of overall net worth of the whole company, that division won’t last.
Dakan45
January 4, 2014 at 08:03
yeah but ms never game much of a damn about xbox.
Xbox had low sales, they did fine.
x360 broke all the time, sony had double the losses.
Xbox one, isnt evne trying to be competitive.
Ms is huge, sony however, their main moneymaker is playstations.
SPONGEGUMS
March 7, 2014 at 09:15
Sony is not making a profit on hardware. That $18 or so dollars is easily eaten up with marketing and other costs.
Dakan45
March 8, 2014 at 05:35
agreed
Anukul
January 3, 2014 at 22:15
In simple words – “not happening”
Jim Lenoir (Banana Jim)
January 7, 2014 at 19:41
In case, any one is interested, it’s now 46% chance of bankruptcy. Such is the exciting world of shares and high finance.
Dubbx
April 3, 2014 at 03:33
Nintendo has waaayyyy less than a 22% chance of going bankrupt! they could survive for 4 more decades on console “flops” and they could still survive much longer by selling their IPs and stock.