Lack of PS3 sales good news for Sony's bottom line

[Zeus]

They actually admitted that their financial outlook was better than they expected thanks to the lack of sales of PS3s (they lose money on each one, so the less they sell, the less they lose)

http://www.next-gen.biz/index.php?optio ... 9&Itemid=2

I'm sure this caused their share price to increase. I've always found that weird. "We said we were going to lose a shitload but we've only lost a crapload" so their shares go up 'cause they didn't do as poorly as they thought? But they still did poorly, no?

[Don]

Stock is based on expectation. Let's say people think Google will lose half of their money next quarter. You'd expect Google stock to go down by at least 50% (probably a lot more). Now if Google turned around and say it turned out we only lost 25% not 50%, the stock will clearly go back up because it's price is already priced at the 50% loss level. Since it turned out that prediction was wrong, the stocks are undervalued and their price will go up.

Likewise this is why your stock could go down if you do better, but not as good as people think you are. This happened to Google one time where they only increased profit by 50% while people thought it'd go up by 100%. Again, the price of the stock is made based on the assumption Google profit will go up by 100%. So if it only goes up by 50%, it is overvalued, and will go down.

[Zeus]

I'm fully aware of that. What I'm saying is it's stupid. Just because some execs said a year ago "we're gonna lost $400M" but after a year they only lost $290M" don't mean it's a good thing. But you see share prices spike all the time 'cause of that.

[SineSwiper]

Reason #7 to never put your company up on the stock market.

[Nev]

Reason #7 to never put your company up on the stock market.

Sine, it's hard to get behind your brand of corporate criticism. I mean, maybe it's a fallacy and all, obviously your one-line synopsis of a complex situation really *is* the end-all and be-all of corporate wisdom...

In other news, it's also hard to get behind Sony saying "well, our product isn't selling well, but since we're losing massive amounts of money on overly optimistic engineering for it, it's actually making us do better!" That's kind of like a construction company going "well, we're not building many houses, but since we don't know how to make a profit on the ones we do build, that's actually exceptional!"

I dunno, man. As Don noted, stock share price != long-term hope or prospects for the company. "I believe in your company and its products" is hardly 100% of the reason for buying stock.

Chances seem pretty high to me that Sony's gaming department is about to crash into a vast, frozen sea. But that's just my opinion.

[Kupek]

I'm fully aware of that. What I'm saying is it's stupid. Just because some execs said a year ago "we're gonna lost $400M" but after a year they only lost $290M" don't mean it's a good thing. But you see share prices spike all the time 'cause of that.

"Good" has nothing to do with it. It's accurate assessment of value.

[Zeus]

I'm fully aware of that. What I'm saying is it's stupid. Just because some execs said a year ago "we're gonna lost $400M" but after a year they only lost $290M" don't mean it's a good thing. But you see share prices spike all the time 'cause of that.

"Good" has nothing to do with it. It's accurate assessment of value.

Why because when they made the loss forecast the stock price adjusted accordingly assuming that would happen and since it was better than expected stock prices now rise to adjust to market value? Take a look at RIM's stock over the first 10 years of that company's life and you realize performance isn't the answer half the time.

The simple fact of the matter is that the majority of the market activity is speculation and performance takes a back seat considering most investors don't know the difference between a balance sheet and a sheet of toilet paper.

The great investors and fund managers should be given honorary sociology degrees since they probably understand human nature, thinking, and behavior better than most sociology PhDs

[Nev]

The simple fact of the matter is that the majority of the market activity is speculation and performance takes a back seat considering most investors don't know the difference between a balance sheet and a sheet of toilet paper.

I wouldn't be surprised to find out that the vast majority of market movement *is* speculation, but I'll also say I've never met a serious stock investor who can't read a company report. Zeus, you're a bright guy, but don't make the mistake of thinking that there aren't a lot of other *very* bright people out there as well.

[Zeus]

The simple fact of the matter is that the majority of the market activity is speculation and performance takes a back seat considering most investors don't know the difference between a balance sheet and a sheet of toilet paper.

I wouldn't be surprised to find out that the vast majority of market movement *is* speculation, but I'll also say I've never met a serious stock investor who can't read a company report. Zeus, you're a bright guy, but don't make the mistake of thinking that there aren't a lot of other *very* bright people out there as well.

Oh, there are, but that don't mean that the majority of the people who invest in the stock market even know what the heck their reading if they picked up a set of financials, a financial report, etc. Heck, my CFO and CEO probably couldn't decipher a financial statement if their lives depended on it.....and I'm employed by one of the 50 biggest companies in the world.

Most people rely on other's (the "very smart" ones) interpretation of financial performance to make decisions rather than knowing how to interpret themselves. 'Cause of that, most investing decisions, IMO, are made not due to the performance of a company (remember, they don't really understand it, they get it deciphered for them) but rather what they think how others are going to behave. This causes a disconnect between performance and stock price as it has recently with Sony and in the past with RIM. That's what I was getting at.

Please, don't assume I have a superiority complex. If you talked to me IRL, you'd realize that's exactly the opposite of the truth. I may bitch and complain about people acting like morons but doesn't mean I think I'm smarter than them.

[SineSwiper]

Sine, it's hard to get behind your brand of corporate criticism. I mean, maybe it's a fallacy and all, obviously your one-line synopsis of a complex situation really *is* the end-all and be-all of corporate wisdom...

Shareholders tend to get in the way of your goals, especially if they may not be the most profitable option possible. Not to mention that you can't really get to a goal in the first place. As soon as you get to a comfortable spot and say "wow, the company is doing well", the shareholders get pissed and wonder why you aren't making MORE profit. You can't win, and since they are holding on to all of your money, they have your company by the balls.

Like I've said a thousand times, and this article seems to prove it, shareholders only care about up and down numbers, not any form of long-term goals.