Sony's game division loses $654 million

[Slayer]

Originally Posted by Aodh

Actually, profits and revenue go hand in hand. If you don't have sufficient revenue, you run into cash flow problems.

I agree but...

Depends on your operating expenses. If you keep your fixed expenses in check and variable expenses are in line (cost of goods sold for example or marketing expense) then you can operate at strong profit with reduced revenue. Of course if your saying that if you have very little revenue then your out of business because of cash flow.. well of course (but the low revenue stems from some flaw in the business model, products brought to market for example). Keep in mind a great part of cashflow needs are generated from fixed (controllable) expense. For example, often times a companies highest expense is payroll. This is true especially in smaller businesses. Keep your payroll costs in line and you can operate with lower revenue.

What I am saying is it isnt all about revenue or selling the most. As a business owner I want the companies I am involved with to make money first and foremost. If they increase their revenue great, if not then lets focus on cost and ensure profit because at the end of the day making money is what really matters. Profit ensures job security for our employees and continued business operation (and hopefully expansion).

Around here, some people think that it all comes down to more and more revenue or outselling the other guy and it isnt that simple. Revenue means nothing if costs run rampant. Its a balancing act.

[Slayer]

Originally Posted by Elee s

CEO was contemplating dropping 40% of the market.. regardless of what we know about profits thats just crazy.
(which again leads me to believe that it was just PR speak and that he never intended to drop Sony)

I didnt say the guy was sane, I was just pointing out a possible path of logic (though I wouldnt subscribe to it).

[Highflyer]

Bleeding money from any corporation isn't good. If Sony didn't have the personnel reduction in Q2 of 16,000 from it's payroll they would have lost a great deal more in profits.
I can't find the particular article at this time, but it has been stated that the reason the car manufacturers did so poorly was because they had so much inventory on hand that wasn't sold besides union contracts, liabilities and other issues such as poor management. The only car manufacturer that didn't need bailing out had changed its inventory methods because of the CEO sometime before the financial market crash, so they started producing what was necessary, less money on the books. Drive by any manufacturing plant or ports and you will see several vehicles just waiting. What is the percentage of vehicles already sold and I mean even by the dealers?!

[murphjp]

Originally Posted by Highflyer

Bleeding money from any corporation isn't good. If Sony didn't have the personnel reduction in Q2 of 16,000 from it's payroll they would have lost a great deal more in profits.

But they did do those layoffs so whats your point?

[murphjp]

Originally Posted by Slayer

Actually profits mean more than revenue. If you think otherwise then you have never owned or run a business.

Did I say profits were not important?

I was meaning a short term increase in profit for a cost of 40% of your revenue is not worth it.