If I remember right you can expense R and D costs in Japan. Seeing as they have a relatively new handheld and a new console coming out, plus the price cuts it would actually make quite a bit of sense to be having a loss. There have been companies in the same industry that have gone into the red and still come back, so the doom and gloom seems pretty premature.
My Backlog | http://www.backloggery.com/thesolarknight
We knew this was coming, even with the turnaround of the 3DS system. Nintendo still has a lot of pressure to keep the 3DS sales up and get the new console launched successfully this year. It's a large task, but if anyone can do it, Nintendo can. We'll just have to wait and see how things unfold.
We knew this was coming, even with the turnaround of the 3DS system. Nintendo still has a lot of pressure to keep the 3DS sales up and get the new console launched successfully this year. It's a large task, but if anyone can do it, Nintendo can. We'll just have to wait and see how things unfold.
Nintendo has been in worse (remembers the GameCube), but they had strong GBA sales to back them up.
Did Nintendo do poorly in the N64 era? I remember the N64 hardly had any 3rd-party support, but were they financially stable back then?
@LordTendoboy Well accounting doesn't work that way.
Previous profits would have been displayed in earlier income statements; it's generally not a straight carry over from the previous statement. Those profits, would at this point, have been converted into some other account (assets or expensed towards Research and Development [R and D]). Assets such as cash, equipment, A/R (accounts receivable) don't usually show up on Income statements unless they're being written off or amortized. So a portion of what appeared as profits in a previous statement can become an expense on future statements, and in this case with their newer systems out and forthcoming a considerable R and D cost has appeared on their statements.
This is one of the reasons why you should never look alone at an income statement to gauge how a company is doing. In addition, people should actually take a look at the other aspects of the statement instead of staring at the profit/loss lines, it's more informative that way. The types of expenses can generally give you an idea of what the company is doing at the moment and why their net income/loss is the way it is.
Wow that non-capitalized "In" really bugged me in my post XP.
Digitaloggery 3DS FC: Otaku1 WiiU: 013017970991 Nintendo of Japan niconico community is full of kawaii! Must finish my backlagg or at least get close this year W...
@LordTendoboy Well accounting doesn't work that way.
Previous profits would have been displayed in earlier income statements; it's generally not a straight carry over from the previous statement. Those profits, would at this point, have been converted into some other account (assets or expensed towards Research and Development [R and D]). Assets such as cash, equipment, A/R (accounts receivable) don't usually show up on Income statements unless they're being written off or amortized. So a portion of what appeared as profits in a previous statement can become an expense on future statements, and in this case with their newer systems out and forthcoming a considerable R and D cost has appeared on their statements.
This is one of the reasons why you should never look alone at an income statement to gauge how a company is doing. in addition, people should actually take a look at the other aspects of the statement instead of staring at the profit/loss lines, it's more informative that way. The types of expenses can generally give you an idea of what the company is doing at the moment and why their net income/loss is the way it is.
So what's your take on the matter at hand? Is Nintendo doing good or bad financially? And wouldn't your logic contradict all those doom and gloom reports about Sony, or is Sony really doing bad?
waiting for PolkaDotChocobo to show up and spin things so they don't look that bad
No spin necessary. Things are pretty crap for Nintendo and just about every other Japanese vendor right now, but none of them are going anywhere.
The main problem is the Yen, which is too strong for an economy that relies as heavily on exports as Japan does. Yen goes up, they make less money.
Australia's facing the same problem, which is why you saw so many Australian development studios shutter over the past year.
As to how to fix it? Well, Nintendo can't do much but ride the wave. Thanks to previous profitable years and the new hardware they've got now/ coming soon, they're in a better position than many.
So what's your take on the matter at hand? Is Nintendo doing good or bad financially? And wouldn't your logic contradict all those doom and gloom reports about Sony, or is Sony really doing bad?
Sigh.
Sony's fine. It's gone through a massive transformation under Stringer. That's expensive, but it was necessary. It's also suffered a shocking 2011, with the malicious hack, the earthquake and tsunami, and then the floods in Thailand ruining the HDD business for anyone who makes PCs and notebooks.
Sony's also a very big corporation, and a few years of loss isn't going to sink it. You'll see Sony return to a more profitable state over the next few years.
waiting for PolkaDotChocobo to show up and spin things so they don't look that bad
No spin necessary. Things are pretty crap for Nintendo and just about every other Japanese vendor right now, but none of them are going anywhere.
The main problem is the Yen, which is too strong for an economy that relies as heavily on exports as Japan does. Yen goes up, they make less money.
Australia's facing the same problem, which is why you saw so many Australian development studios shutter over the past year.
As to how to fix it? Well, Nintendo can't do much but ride the wave. Thanks to previous profitable years and the new hardware they've got now/ coming soon, they're in a better position than many.
So what's your take on the matter at hand? Is Nintendo doing good or bad financially? And wouldn't your logic contradict all those doom and gloom reports about Sony, or is Sony really doing bad?
Sigh.
Sony's fine. It's gone through a massive transformation under Stringer. That's expensive, but it was necessary. It's also suffered a shocking 2011, with the malicious hack, the earthquake and tsunami, and then the floods in Thailand ruining the HDD business for anyone who makes PCs and notebooks.
Sony's also a very big corporation, and a few years of loss isn't going to sink it. You'll see Sony return to a more profitable state over the next few years.
A few years of losses might cause them to close down their game divisions. If Sony can't bring the PlayStation brand back to profitability, they may just decide it's not worth it anymore.
A few years of losses might cause them to close down their game divisions. If Sony can't bring the PlayStation brand back to profitability, they may just decide it's not worth it anymore.
The PlayStation division was going to return to profitability in 2011 until some higher being decided Sony needed to be hit by three disasters in the one year and that they value of the Japanese yen needed to skyrocket.
It would have to be absolutely horrific before Sony would kill off one of the most valuable brands in entertainment. Just the name "PlayStation," not including any hardware, services or associated products, is worth hundreds of millions, if not billions of dollars.
A few years of losses might cause them to close down their game divisions. If Sony can't bring the PlayStation brand back to profitability, they may just decide it's not worth it anymore.
The PlayStation division was going to return to profitability in 2011 until some higher being decided Sony needed to be hit by three disasters in the one year.
It would have to be absolutely horrific before Sony would kill off one of the most valuable brands in entertainment. Just the name "PlayStation," not including any hardware, services or associated products, is worth hundreds of millions, if not billions of dollars.
But Sony's arrogance and desire to cram as much high-end tech into the PS3 as possible caused the console to debut at $500, which ultimately cost them millions of potential sales. They did this to themselves, long before any of those outside troubles happened. They thought the name "PlayStation" alone would make them the market leader again, but sales prove otherwise.
A few years of losses might cause them to close down their game divisions. If Sony can't bring the PlayStation brand back to profitability, they may just decide it's not worth it anymore.
The PlayStation division was going to return to profitability in 2011 until some higher being decided Sony needed to be hit by three disasters in the one year.
It would have to be absolutely horrific before Sony would kill off one of the most valuable brands in entertainment. Just the name "PlayStation," not including any hardware, services or associated products, is worth hundreds of millions, if not billions of dollars.
But Sony's arrogance and desire to cram as much high-end tech into the PS3 as possible caused the console to debut at $500, which ultimately cost them millions of potential sales. They did this to themselves, long before any of those outside troubles happened. They thought the name "PlayStation" alone would make them the market leader again, but sales prove otherwise.
Oh lord, where do I start....
I said (once again, read before you go off on one of your tangents) that Sony was expecting to return to profitability in 2011 before the disasters hit. Stringer had built a lucrative online infrastucture for Sony and has done a good job of kickstarting the process of bringing everything Sony offers into one iTunes-like service. Consumers were buying it. The early days of the PlayStation 3 were a completely different topic, which I had made no comment on whatsoever.
And nothing that you said above, even if it was true, changes the fact that the PlayStation brand is incredibly valuable.
And nothing that you said above, even if it was true, changes the fact that the PlayStation brand is incredibly valuable.
I know this isn't what you were meaning, but I'm going to state it anyways:
If the brand was still as strong as it was in the past, then the PS3 would have shot past the Wii once the price hit -$300, but that never happened. PS3 is still in third-place overall. I sincerely hope that Sony doesn't go all out on the PS4 so they can price it affordably from the beginning. They could take a page from Nintendo and make the PS4 a comparatively low-end console, so they can sell it at a profit and recoup their losses from this gen.
@LordTendoboy I'd say Nintendo is fine at the moment. One of the more important things in business is to remain liquid cause generally that's what causes businesses to continue to operate. There are plenty of businesses that have negative operating incomes but manage to keep running year by year. The moment you don't have any cash or cash equivalents to pay your bills (and its mostly the interest) is when you'll run into problems financially. That's when your creditors can force bankruptcy. Nintendo is still sitting on some considerable quick assets they can use for any payments they need to make on short notice.
They just need to make some software sales to recoup their "apparent" losses since a lot of their income is from games. Not really an issue if you look at their next couple of months. Another Mario game wouldn't hurt either, especially a 2D one. They still have the Pokemon and Smash Bros wild cards they haven't used yet.
Another thing we have to remember here is that Japanese GAAP (Generally Accepted Accounting Principles) aren't necessarily the exact same as those in the States (or other countries for example). And even with that out of the way, GAAP is pretty flexible (you can make a loss look like a profit and vice versa), unless a company is doing HORRIBLY bad; they can essentially show you what they want to show you. I mean a loss is pretty good for avoiding some taxes.
And if worse comes to worse, well they can sell IP (or contract it out for a little while). Some of Nintendo's IPs are worth billions of dollars. Actually, who am I kidding. The worst option would be to ask for a bailout from the government since they can't afford to lose such a valuable company. Of course, we're nowhere near that point anyways.
I don't believe Sony will go under. Unlike Nintendo, they have their hands in a lot of different markets, the big one being the BluRay market. I'm sure they get quite a bit of money from licenses alone, not to mention getting huge profits from blockbuster actions movies (Sony Pictures). Even if their gaming division is faltering, they have their other divisions holding up the company. Quite frankly, being who they are, they have the option of a bailout too if they need it.
My Backlog | http://www.backloggery.com/thesolarknight
@LordTendoboy I'd say Nintendo is fine at the moment. One of the more important things in business is to remain liquid cause generally that's what causes businesses to continue to operate. There are plenty of businesses that have negative operating incomes but manage to keep running year by year. The moment you don't have any cash or cash equivalents to pay your bills (and its mostly the interest) is when you'll run into problems financially. That's when your creditors can force bankruptcy. Nintendo is still sitting on some considerable quick assets they can use for any payments they need to make on short notice.
They just need to make some software sales to recoup their "apparent" losses since a lot of their income is from games. Not really an issue if you look at their next couple of months. Another Mario game wouldn't hurt either, especially a 2D one. They still have the Pokemon and Smash Bros wild cards they haven't used yet.
Another thing we have to remember here is that Japanese GAAP (Generally Accepted Accounting Principles) aren't necessarily the exact same as those in the States (or other countries for example). And even with that out of the way, GAAP is pretty flexible (you can make a loss look like a profit and vice versa), unless a company is doing HORRIBLY bad; they can essentially show you what they want to show you. I mean a loss is pretty good for avoiding some taxes.
And if worse comes to worse, well they can sell IP (or contract it out for a little while). Some of Nintendo's IPs are worth billions of dollars. Actually, who am I kidding. The worst option would be to ask for a bailout from the government since they can't afford to lose such a valuable company. Of course, we're nowhere near that point anyways.
I don't believe Sony will go under. Unlike Nintendo, they have their hands in a lot of different markets, the big one being the BluRay market. I'm sure they get quite a bit of money from licenses alone, not to mention getting huge profits from blockbuster actions movies (Sony Pictures). Even if their gaming division is faltering, they have their other divisions holding up the company. Quite frankly, being who they are, they have the option of a bailout too if they need it.
I never said the entire Sony Corp would go under, I was just saying that if the PlayStation brand wasn't profitable enough for them, they could always sell it to another company or just close it down.
I don't really think brand strength is going to be a problem here. With the Vita out in Japan and soon to be out in the other regions, it's only going to increase their brand recognition. An improved software library over time will just continue to strengthen the brand as more people potentially get the hardware for popular IPs. As long as nothing else quite so dramatic as a natural disaster occurs (or horrible failure rates for example) they SHOULD be fine.
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