MS cuts jobs, Sony losses even worse than expected

[Velorath]

MS is cutting 5000 jobs.  The games division still seems to be doing well though.

Microsoft says it will lay off 5,000 workers over the next 18 months, nearly five percent of its total workforce, as the tech giant's total profits for the fourth quarter of 2008 declined to $4.17 billion from $4.71 billion in the same period last year.

The decline came in spite of a 2 percent increase in total revenues to $16.63 billion -- and, crediting the global economy, the company says it must take steps to manage costs.

The company's Entertainment and Devices Division, which contains its Xbox 360 and games businesses, saw $3.18 billion in revenue for the quarter, an increase of 3% over 2007's $3.07 billion. However, the division had less revenue in the second half of 2008 than it did in 2007 -- $4.99 billion versus $5.02 billion.

The company says that while Xbox 360 platform and PC game revenue drove the increase, it was offset by a decrease in revenue from the company's Zune music player. And while Xbox 360 platform and PC game revenue specifically was up 6 percent to $135 million, price reductions still offset the bottom line.

The five percent year-over-year revenue decline in the six-month comparison is because of the comparison to Halo 3's $330 million launch last year, the company adds.

Microsoft says it shipped 6 million Xbox 360 consoles during the quarter, compared to 4.3 million in the previous year. In all, 8.3 million Xbox 360 consoles were shipped in the last six months of 2008, versus 6.1 million consoles in the year previous.

Meanwhile Sony had previously gone from expecting a ¥200 billion profit for the year to expecting a ¥100 billion loss.  Matters have apparently gotten worse and they are now expecting a loss of up to ¥260 billion ($2.9billion).

Sony Corp. has revised its projected annual operating loss from a previously expected figure of ¥100 billion ($1.1bn) to as much as ¥260 billion ($2.9bn).

As previously reported, the loss will be the company’s first in 14 years and only the second in its history.

The strong yen and declining demand for its products in the current global economic environment were again blamed for the results. Previously, Sony had expected a ¥200 billion profit for the year.

As stated yesterday, the company is accelerating its restructuring plans, with job cuts of up to 16,000 expected. According to a Reuters report, Sony has doubled its cost-cutting target for the financial year ending March 2010, to ¥250 billion ($2.8bn).

In addition, the company has announced that it expects losses for its games division to rise up to ¥30 billion ($338 million) for the fiscal year, with half of that attributed to lower than expected sales.

Although Sony’s games division is still struggling to turn a profit, after previously being one of the company’s most profitable areas, the main problem continues to be television sales. Digital camera and video recorder sales have also disappointed, with even Sony Pictures underperforming.

Sony has said it will end TV production and design at one plant in Japan and reduce its TV design headcount by 30 percent overall worldwide. Plans are also afoot to consolidate its workforce in areas such as batteries and small and mid-size LCD panels.

Although no specific plans for Sony Computer Entertainment (SCE) have been revealed, SCE Europe president David Reeves insisted in December that the division was “not scaling back at all”.

Word seems to be coming out now (from a Sony presentation slide that Kotaku posted up) that SCE might in fact be seeing job cuts.

[Lantyssa]

So MS still makes 4 billion in profits, only down 1/9th from last year, and they need to fire 5000 people?  That total profits means they still made a profit, right?

[NiX]

I think it's a pre-emptive cut based on the economy. As much as they made money now, what happens over the next year? Especially considering everyone is predicting it will get a lot worse.

[Soln]

it's only 5k for all of 2009


Edit: 5k out of 91k.  Not dismissing impact to people, just org is still huge.

[Lantyssa]

Kind of a self-fulfilling prophecy if you're pre-emptively cutting jobs so people no longer have money to spend, which kills the economy.  Probably precipitated by the stock market because they need growth year after year and not profitability.

Gods I hate our financial system.

[Venkman]

Consumer product companies or divisions already know by this point what products will be on store shelves in August for Q4 of this year. By now, Marketing folks are probably finalizing their plans for Q4 2010. Considering the retailers are cutting back this year, and nobody anywhere expects the entire global economy to swing around anytime soon, 2010 is going to feature even less demand. Particularly for overpriced commodity items like TVs, especially since the global recession blew through the confusion retailers were trying to use to get people to buy the higher-profit HDTV models.

So while supply-chain cutbacks have been ongoing, now we're starting to see the impact on the R&D side. If you're selling less products in year one for reasons outside your control, and which nobody thinks will change, then you're selling even less in year two.

At the same time, it's only self-fulfilling if you roll the problem back to its source. But that's what we have the Barclay's thread in Politics for.

Edit: Formatting is hard.

[Hawkbit]

Initial reports say that MS is dropping it's flight simulator program entirely.  Just a rumor. 

[Jain Zar]

Kind of a self-fulfilling prophecy if you're pre-emptively cutting jobs so people no longer have money to spend, which kills the economy.  Probably precipitated by the stock market because they need growth year after year and not profitability.

Gods I hate our financial system.

Welcome to capitalism.  Its not about constantly making a profit.  Its about constantly making MORE profit.

[Trippy]

Initial reports say that MS is dropping it's flight simulator program entirely.  Just a rumor. 

It's been confirmed by MS:

http://venturebeat.com/2009/01/23/microsofts-game-studios-take-a-beating-in-layoffs/

[Big Gulp]

Welcome to capitalism.  Its not about constantly making a profit.  Its about constantly making MORE profit.

It used to be buy and hold, and not just "where's my stock at today?".  My grandmother owned GE stock for 30 years, happily cashing her dividend checks and when she died my mother inherited the stock.  That's how things used to work, and frankly I think it was a saner way to go about it.  We're the ones responsible for most of the market chaos because we've become a nation of day traders.

[Margalis]

Some stocks don't even pay dividends at all. Which means they have zero intrinsic value and are worth only what other people will pay for them.

It really is quite crazy when you think about it. It's like selling buying monopoly money with the hope that someone else will buy it off of you for a higher price. And being right.

[Engels]

Initial reports say that MS is dropping it's flight simulator program entirely.  Just a rumor. 

It's been confirmed by MS:

http://venturebeat.com/2009/01/23/microsofts-game-studios-take-a-beating-in-layoffs/

Not too surprising, since these fuckers have been resting on their laurels for decades now. Its the only 'major production' flight sim out there, and although its graced us with good documentation, the actual scenery and content leave a lot to be desired. Maybe now X Plane can hook up with a professional distributor and put out something that's more user friendly.

[Big Gulp]

Not too surprising, since these fuckers have been resting on their laurels for decades now. Its the only 'major production' flight sim out there, and although its graced us with good documentation, the actual scenery and content leave a lot to be desired. Maybe now X Plane can hook up with a professional distributor and put out something that's more user friendly.

The problem is that it's hard enough getting people to buy combat flight sims, let alone "I adjusted my flaps and am now flying for 4 hours to L.A.!" flight sims.  It's like catering to the old school, hex-based war gaming grognards, with the difference being that flight sims are expensive to make and turn based hex wargames are cheap.

This was bound to happen.

[Engels]

All very true, but I was getting sick and tired of MS cranking out yet another Flight Sim Xxx with promises of more awsome, this time for realz!!1! and discovering that its just a do-over. The latest one claimed to be a DX10 product, was pushed out a la Conan, and never got the fabled DX10 patch. Total waste of money, really. The one prior to that was near identical.

[MahrinSkel]

MS Flight Simulator is actually a pretty steady seller for them, precisely because it's so hung up on operating realism.  But the market is not gamers, it's pilots.  Yet to meet a pilot (even a part-time amateur) who didn't have it and use it regularly.  Sim time is expensive and booked months in advance, certified instructors are few, even more expensive, and even more booked up.  If you're trying to qualify on a new aircraft type, getting enough hours or instructor time to really know the procedures and flight profile is expensive as hell.  Just getting barely enough instructor hours to qualify for your first jet solo can cost thousands.

--Dave

[cmlancas]

Welcome to capitalism.  Its not about constantly making a profit.  Its about constantly making MORE profit.

It used to be buy and hold, and not just "where's my stock at today?".  My grandmother owned GE stock for 30 years, happily cashing her dividend checks and when she died my mother inherited the stock.  That's how things used to work, and frankly I think it was a saner way to go about it.  We're the ones responsible for most of the market chaos because we've become a nation of day traders.

And I bet she's shitting bricks because in the last two years it's lost about 70% of its total value.  In today's current economy, you need to heavily assess the "where's my stock at today?" while still maintaining the buy and hold mentality.

 
Also, we aren't the ones responsible for market chaos.  It's clearly credit and housing.  We only account for the wacky 300 point daily swings (note, I said swing, which goes both ways), not for the freefall of the DJIA.

Edit:  My uncle is a 40 year GE man who can't get out of the company now because his retirement had the same thing happen to him.

[Lantyssa]

And the Housing market being inundated with flippers and a similar day trader make-money-at-all-costs mentality had nothing to do with it?  These things don't exist in a closed systems, else stocks wouldn't be taking a hit.

[Engels]

Everyone's guilty of the mentality behind the crash, but its the deregulation, most notably the Financial Modernization Act of 1999 and later the Commodity Futures Modernization Act of 2002 courtesy of Phil "nation of whiners" Gramm (R:Tx) essentially allowed the level of damage we see today. It was all originally done to allow Ken Lay the now infamous Enron loophole, but the abilty to gamble at insanely leveraged levels was a piece of policy that affected the entire market infrastructure.

The real damage was never the single real-estate swapper or the foolish single day trader, but hedge funds playing with billions of pretend money created by the greed of a few socipathic congressmen.

[SnakeCharmer]

If you're going to bring politics into it and start naming parties, be sure an note that there was a big huge D beside the name of the President who signed the GLBA back in '99.  Note that President could have veto'd it, but didnt.

Just sayin'.  If you're going to lay blame, lay it on all parties and be honest about it.

[Lantyssa]

That's why I'm just sticking to the psychology behind why this is a mess.  A lot of people are to blame, on all sides of the political idealogical spectrum.  It's not worth going there in a non-Politics thread.

Seeing a company lay off people when they're still highly profitable though?  That irks me.

[SnakeCharmer]

Way of the world, I'm afraid.  It's not enough to post (arbitrary numbers) a 6.8 percent profit, when the previous year the company was 7.0 percent.  The loss of .2 is enough to send the media (and bean counters and shareholders) into a frenzy.

Regardless of who signed what that was pushed by who, you can't legislate stupid.  Borrowing more than one can afford or accepting some wacked out ARM or interest only loan is the textbook definition of stupid.

[Engels]

I don't want to go into a blame game either, but I think the point is that you can regulate that, it was regulated, it got deregulated and voila, teh hounds of stupid were let loose.

[Venkman]

Yes. And as I said earlier, we have a whole forum to discuss this. And it's been discussed there quite a lot.

MS Flight Simulator is actually a pretty steady seller for them, precisely because it's so hung up on operating realism.  But the market is not gamers, it's pilots.  Yet to meet a pilot (even a part-time amateur) who didn't have it and use it regularly.  Sim time is expensive and booked months in advance, certified instructors are few, even more expensive, and even more booked up.  If you're trying to qualify on a new aircraft type, getting enough hours or instructor time to really know the procedures and flight profile is expensive as hell.  Just getting barely enough instructor hours to qualify for your first jet solo can cost thousands.

--Dave

Not a huge market? Or was MS not properly working with them to give them what they need? Flight Simulator was never going to be a casual-friendly couple-o-times-a-year Wii title, so you'd think after doing this for so long, they'd have a REAL good understanding of their market and scale accordingly.

Or maybe that's what this latest move was all about?

[Jain Zar]

I tend to ignore any sim that isn't buy Microprose.  Which means I haven't had the need to buy a sim since.. my 486 25 with 2 megs ram?

How could Microprose have made such easy and fun to learn sims while still keeping all the crunchy detail modern sims seem unable to do?

F19.  Gunship.  Solo Flight. 

Loved those things. 

I've avoided modern sims as they are either dry, overcomplicated, require a sick machine to run, or are all of the above.

I even tried some of the Win 98 era Jane's games.  None of them grabbed me the way those oldies did.   

[Merusk]

Because as Dave and Darniaq just pointed out they aren't games, which the Microprose Sims were.  They're cheap flight simulators designed to emulate every nuance of flying a real aircraft to the point pilots train on them.  Yeah, you've got a niche market of pilots and terrorists there.

[Velorath]

Chris Early, Games for Windows Live boss, layed off.  Not really a big surprise since the attempt at bringing Live to PC's was pretty much a disaster.

[cmlancas]

Which I think is shocking, considering how many people pay for XBL.  It can't be that hard to port a moneyhat.

[Velorath]

Which I think is shocking, considering how many people pay for XBL.  It can't be that hard to port a moneyhat.

Do you seriously not understand why XBL isn't a moneyhat that can be ported to the PC?

[Venkman]

Which I think is shocking, considering how many people pay for XBL.  It can't be that hard to port a moneyhat.

XBL != Windows Live.

There is no competitor for the former. Of the three consoles it is far and away the best, and it's not like there's going to be a competitor on the X360 either.

But for PCs, Windows Live sucks. It has as far to go just to catch up with Steam as Nintendo has to catch up to XBL. I don't know how much of a hand Early had in how Live was rolled out, but it was years too late for what it was when it finally did, and in no shape to be charging money for it.

[Margalis]

Windows Live stunk of the same mixed-message, no-message, constantly changing message mess that was .NET. It's never been clear what Windows Live is or why anyone should care.

[Fordel]

Windows live is one of those things where you just go "I can get something better, for free." You don't compete with free.

[Sky]

I don't even know what you guys are talking about. Isn't it great having to log into WL to get achievements in Fallout3?

Ok, I don't give a fuck about Windows Live. But I did have a profile all set up for when I got the 360 online!