Toshiba Reports Q1 Profit Growth

-- TWICE, 7/27/2007 9:46:00 AM
Tokyo — Toshiba reported a five-fold net profit growth in its first quarter (April-June period), resulting largely from semiconductors and special profits from the sale of real estate and a stake in a Japanese music-content venture to EMI Group.

Net income rose to $174 million (20.6 billion yen) in the three months, ended June 30, over the same period in 2006. Toshiba reported a $105.8 million (12.7 billion yen) gain from selling its 45 percent stake in Toshiba-EMI to EMI Group.

The company reported a 1.6 percent rise in quarterly operating profit on its chips and laptops, driven by stronger demand for its semiconductors, including Cell chips used in Sony’s PlayStation3, and chips used in LCD televisions, including those produced by Sharp and Hitachi.

Sales rose 15 percent to $13.3 billion (1.66 trillion yen), Toshiba said. Operating profit rose 1.6 percent to $176.6 million (21.2 billion yen) in the quarter.

death knell for Blu-Ray ?

Very good news.

I highly doubt that HD-DVD is even profitable for them.

They are taking a sizable hit on every player sold.

I highly doubt that HD-DVD is even profitable for them.

They are taking a sizable hit on every player sold.

i wonder if toshiba's hit is bigger then sony's hit with blu-ray players and ps3 ???

so toshiba only made money off sony's ps3 using its chips, selling off EMI Group, and lcd... still im surprised it made enough to post a positive income after all the money it is hemorrhaging on losses to the HD-DVD division

I highly doubt that HD-DVD is even profitable for them.

They are taking a sizable hit on every player sold.

Link?

I highly doubt that HD-DVD is even profitable for them.

They are taking a sizable hit on every player sold.

Post up a link Bob.

And Toshiba want to play with the big boys, a real profit of $68.2m (once one offs are taken out) compared to Sony reporting $551.5m whilst losing about $250m on the PS3.

So you see why Toshiba are so desperate to replace DVD patent royalties.

I highly doubt that HD-DVD is even profitable for them.

They are taking a sizable hit on every player sold.

Link please.


so toshiba only made money off sony's ps3 using its chips, selling off EMI Group, and lcd... still im surprised it made enough to post a positive income after all the money it is hemorrhaging on losses to the HD-DVD division

Yes and the overwhelming data you've provided supporting this hypothesis is impressive.

Yes and the overwhelming data you've provided supporting this hypothesis is impressive.don't worry
he's on everyone's ignore list
never posts anything relevant anyways

so toshiba only made money off sony's ps3 using its chips, selling off EMI Group, and lcd... still im surprised it made enough to post a positive income after all the money it is hemorrhaging on losses to the HD-DVD division

It is funny that Playstation 3 sales contributed to Toshiba's profit but no mention was made of HD-DVD sales contributing. Very ironic.

For those of you who say Toshiba is losing money on HD DVD - Here is all the brand new financial data:

Show me


http://www.toshiba.co.jp/about/ir/en/library/er/er2007/q1/ter2007q1e_02.pdf

http://www.toshiba.co.jp/about/ir/en/library/er/er2007/q1/ter2007q1e_03.pdf

http://www.toshiba.co.jp/about/ir/en/library/er/er2007/q1/ter2007q1e_01.pdf

http://www.toshiba.co.jp/about/ir/en/library/er/er2007/q1/ter2007q1e_06.pdf

http://www.toshiba.co.jp/about/ir/en/library/er/er2007/q1/ter2007q1e_08.pdf

NET SALES BY REGION:

http://www.toshiba.co.jp/about/ir/en/library/er/er2007/q1/ter2007q1e_07.pdf


TOSHIBA INVESTOR RELATIONS PAGE WHERE LINKS COME FROM:

http://www.toshiba.co.jp/about/ir/en/library/er/er2007q1.htm

I love when companies skew financial reports!

Net income rose $174M, but of that, $105.8M was from selling off part of EMI, which leaves us with $68.2M (minus their income from selling real estate) as operating income.

So where did that income come from? Well, its semiconductor business which includes chips for the PlayStation 3.

So, while Toshiba is taking a bath on its HD DVD players, its making a profit from assisting a Blu-ray venture. That's what we call diversification, and a good way to hide losses from investors.

Also, does anyone else remember last quarter when Toshiba sold off their movie distro arm? Sounds like they will continue to sell off their excesses to cover operating losses from its HD DVD venture.

Yes and the overwhelming data you've provided supporting this hypothesis is impressive. The data's right in the official news:

"Net income rose to $174 million (20.6 billion yen) in the three months, ended June 30, over the same period in 2006. Toshiba reported a $105.8 million (12.7 billion yen) gain from selling its 45 percent stake in Toshiba-EMI to EMI Group [ed note: $174m-$105.8m=$68.2m]...The company reported a 1.6 percent rise in quarterly operating profit on its chips and laptops, driven by stronger demand for its semiconductors, including Cell chips used in Sony’s PlayStation3, and chips used in LCD televisions, including those produced by Sharp and Hitachi."

For those of you who say Toshiba is losing money on HD DVD - Here is all the brand new financial data:
OK, what exactly do you think this is telling those who say Toshiba is losing money on HD DVD? That they are right? That they are wrong?

There isn't anything in here to either refute or back up that claim so what's your point?

I highly doubt that HD-DVD is even profitable for them.

They are taking a sizable hit on every player sold.
Proof please.

Blu-ray must just be killing Sony then.

Proof please.

Blu-ray must just be killing Sony then.

So that $808m (if you include Sony Ericsson and Sony BMG equity) is imaginary then?

On one side you have Toshiba, a second tier manufacturer for most CE goods, but big in semi-conductors and large scale industrial ventures - on the other, Sony - biggest CE company on the planet and huge in entertainment and media, and gaming.

One made $808m this quarter (the weakest in the calendar for any large CE company) the other sold off a division to make $175m. Which would you say is in better shape to wage a war?

I find that super-ironic I must admit. Toshiba is making money off of Sony losing money on the PS3 . . . got a good chuckle.

For the record, I highly doubt that Cell is the reason for the semiconductor divisions strong performance; news outlets just like to highlight it because it's an immediate mental association they have. But the Cell in PS3 is made on an SOI process, whereas Toshiba's Cell efforts are on CMOS, and in fact for their reference systems are sourced from IBM. Toshiba certainly makes some royalty fees off of Cell, and have a business surrounding it, but they are not selling Sony Cell chips for the console.

They are, however, potentially selling them the southbridge chip, which many suspect to be the Toshiba 'Super Companion Chip.' Not to mention of course their cut of the PS2 legacy B/C hardware.

I'm a fan of Toshiba; them and Sony work together on a lot of interesting technologies. It's a shame this format war had to take place, and a shame that Ken Kutaragi - a strong bridge between the two companies - had his role diminished after Stringer took over. But it is what it is, brother against brother and all that...

OK, what exactly do you think this is telling those who say Toshiba is losing money on HD DVD? That they are right? That they are wrong?

There isn't anything in here to either refute or back up that claim so what's your point?

My point? Everyone wants to be an armchair Manufacturing VP or VP of Engineering or VP of Purchasing.

We know Sony is losing money - all over the media. But other than the A1 isupply article back in June of 2006 there is no documented proof what so ever that these losses are happening.

So I ask for proof . . . and I get FUD in return.

So now I will SPECULATE just like all the rest of you . . . Toshiba has sold about 200,000 HD DVD players. How much have they lost doing it? $200 a player? - Lost money on every single one?

That's $40 million. . . For a $50 BILLION company!

So I say show me proof of the losses or prefex your post with an IMO. Because opinions are worthless on this subject and no proof exists.

Point made!

We know Sony is losing money - all over the media.

Sony Reports Higher First Quarter Sales, Profits (http://www.pcworld.com/article/id,135103-c,companynews/article.html)

Oh bugger, there goes his whole argument!

:D

I love when companies skew financial reports!

Net income rose $174M, but of that, $105.8M was from selling off part of EMI, which leaves us with $68.2M (minus their income from selling real estate) as operating income.

So where did that income come from? Well, its semiconductor business which includes chips for the PlayStation 3.

So, while Toshiba is taking a bath on its HD DVD players, its making a profit from assisting a Blu-ray venture. That's what we call diversification, and a good way to hide losses from investors.

Also, does anyone else remember last quarter when Toshiba sold off their movie distro arm? Sounds like they will continue to sell off their excesses to cover operating losses from its HD DVD venture.

Better take another look at the Sony financial statements - they made a ton of money on the depreciation of the Yen against the USD and the EURO - no selling of products . . . money exchange rates!

and yet when Sony reports that they "made" money on the yen dollar differential, and this offset the loses of the gaming division, this is ok?

Better take another look at the Sony financial statements - they made a ton of money on the depreciation of the Yen against the USD and the EURO - no selling of products . . . money exchange rates!

Well, Toshiba of course enjoyed those same exchange rate benefits - or do we forget what nation Toshiba is based in?

IMO currency fluctuations are par for the course - this years currency boost is next years currency drag. All of these companies have had it effect their earnings countless times; sometimes positively, sometimes negatively.

Sony Reports Higher First Quarter Sales, Profits (http://www.pcworld.com/article/id,135103-c,companynews/article.html)

Oh bugger, there goes his whole argument!

:D

OOPS: PS3 has lost $237 million net for Sony.

Well, Toshiba of course enjoyed those same exchange rate benefits - or do we forget what nation Toshiba is based in?

THAT has not been quoted in ANY articlle concerning Toshiba's quarterly performance BUT is was for Sony.

My point? Everyone wants to be an armchair Manufacturing VP or VP of Engineering or VP of Purchasing.

We know Sony is losing money - all over the media. But other than the A1 isupply article back in June of 2006 there is no documented proof what so ever that these losses are happening.

So I ask for proof . . . and I get FUD in return.

So now I will SPECULATE just like all the rest of you . . . Toshiba has sold about 200,000 HD DVD players. How much have they lost doing it? $200 a player? - Lost money on every single one?

That's $40 million. . . For a $50 BILLION company!

So I say show me proof of the losses or prefex your post with an IMO. Because opinions are worthless on this subject and no proof exists.

Point made!

Where there is smoke there's fire... Toshiba is losing money on the players.

Now I don't have numbers, and I don't have internal company data, but anyone with any logic can figure out they are subsidizing the hardware.. ie, taking a loss.

You HD DVD guys are unbelievable. Seriously. Tell me Sony is losing money on the PS3 or the players, I wouldn't doubt it... for some reason you can't even fathom that Toshiba is taking a bath on the players...

They are probably taking more of a bath than anyone in the BDA.

THAT has not been quoted in ANY articlle concerning Toshiba's quarterly performance BUT is was for Sony.

What does it being quoted in an article matter? Want me to write an article and quote it? I mean what the hell... its yen vs dollars; any sales Toshiba made in the US during the past quarter will receive the same currency boost that Sony's sales received. The only thing I will say is that Toshiba has a lower percentage of its overall sales take place in the US than does Sony, so the currency effect won't benefit them as greatly.

don't worry
he's on everyone's ignore list
never posts anything relevant anyways
+1. Please don't quote obvious trolls. It negates the usefulness of the ignore list.

Well, Toshiba of course enjoyed those same exchange rate benefits - or do we forget what nation Toshiba is based in?

IMO currency fluctuations are par for the course - this years currency boost is next years currency drag. All of these companies have had it effect their earnings countless times; sometimes positively, sometimes negatively.

Two different articles on Sony:

A weak yen, which tends to lift the value of overseas earnings for Japanese exporters, also helped, Sony said in a statement.
Sales in Sony's core electronics sector climbed 11.6 percent, on strong demand for Cyber-shot digital cameras and Bravia liquid-crystal display TVs, which offset declining sales of rear-projection and conventional TVs.

In the Electronics segment, operating income increased 77.3% compared to the same quarter of the previous fiscal year. This was primarily due to a positive impact from the depreciation of the yen versus the U.S. dollar and the Euro, as well as an increase in sales of semiconductors to the Game segment. In the Game segment, the operating loss increased primarily due to the loss arising from strategic pricing of PS3 at points lower than its production cost.

Two different articles on Sony:

I don't understand what you're saying - what is your point in highlighting the currency benefits to Sony? Do you believe that the lack of such statements made about Toshiba... means that they weren't there? Global markets are the reality - it's not like Sony got some special deal here that other Japanese exporters didn't get. Nintendo, Sony, Toyota, Honda, and yes Toshiba - they all benefited from the exchange rate equally in all US operations.

Lee, I love how you won't take me on.

Facts, facts, facts is what I am trying.

I know with you it is more like spin, spin, spin, but try it my way - it can be quite refreshing.

Toshiba and Sony may have different profiles in terms of where they sell their products and the impact of the yen fluctuations on their earnings. This something that must be reported in their financial reports. So if this was a big item for Tosh it would have showed up in their income statement.....guys this is basic reporting stuff.

Toshiba and Sony may have different profiles in terms of where they sell their products and the impact of the yen fluctuations on their earnings. This something that must be reported in their financial reports. So if this was a big item for Tosh it would have showed up in their income statement.....guys this is basic reporting stuff.

16% of Toshiba's operations are in the US - this is in their financial release (which I've read). Sony is about 25%. I already stated on the last page that Sony thus gains a greater advantage from this - but the reporting on Toshiba is going to be lesser compared to the reporting on Sony, and I'll tell you why: Toshiba isn't listed on the NYSE. Thus, we only have a very minimal English-language release from them to go on.

I don't understand what you're saying - what is your point in highlighting the currency benefits to Sony? Do you believe that the lack of such statements made about Toshiba... means that they weren't there? Global markets are the reality - it's not like Sony got some special deal here that other Japanese exporters didn't get. Nintendo, Sony, Toyota, Honda, and yes Toshiba - they all benefited from the exchange rate equally in all US operations.

These articles are not written by Sony. They are written by 3rd parties. They are specifically pointing these issues out for a reason. But the articles on Toshiba present nothing of the sort.

These articles are not written by Sony. They are written by 3rd parties. They are specifically pointing these issues out for a reason. But the articles on Toshiba present nothing of the sort.

Yes you're right - they present nothing of the sort; but they should. Is your assertion that the fact that they present nothing of the sort, indicative that it wasn't there?

Right now Blu-Ray and HD DVD are so small that it doesn't affect the bottom line that much. But the health of the company is important even if it isn't directly related to the formats.

Toshiba had profit growth, therefore they have more money they can toss around. I'll speak specifically in terms of HD DVD. If they are losing money per player (no one has provided a link showing they are) but if they are losing money per player then that cost is easily sucked up by the profit. Whereas if Sony lost profits it is much harder to allocate funds for the advertisement of Blu-Ray.

Yes you're right - they present nothing of the sort; but they should. Is your assertion that the fact that they present nothing of the sort, indicative that it wasn't there?

If they are there they are minimunial so they are not noted. With Sony they made a large impact because everyone knows the Game Segment is draging down Sony

Unfortunately, there is no way to prove that Toshiba is losing money on HD DVD, but I find it very hard to believe that it is profitable when you factor in R&D, promotions (rebates, 5 free movies, etc), marketing/advertising, infrastructure, etc.

Look at the new Samsung dual format player. They sell Blu-Ray standalone players for $450-499 right now and the dual player MSRP's at $1050! IF HD DVD standalone players cost less than $200 for Toshiba to manufacture Samsung should be able to add HD DVD functionality to a Blu-Ray player for less than $600... That tells me that both HD DVD and Blu-Ray cost about the same to manufacture. LG's player still costs $1200. Nobody else makes an HD DVD standalone player. Why do people think that is? I am going to take a wild guess and say that Toshiba is either breaking even or selling at a loss (I am betting on the loss option) and nobody else either can compete at those prices or wants to try....

...Whereas if Sony lost profits it is much harder to allocate funds for the advertisement of Blu-Ray.

But they gained profits, so there ya go...

If they are there they are minimunial so they are not noted. With Sony they made a large impact because everyone knows the Game Segment is draging down Sony

Nothing you're saying is making any sense anymore. First of all, I find it strange that you still doubt the presence of a beneficial exchange rate in Toshiba's favor - it really baffles me. It makes me want to write an article on Toshiba's earnings just to point it out to you, since apparently only if written up by the press is a point legitimate. As to your second sentence, what in the world does their ForEx gains made have to do with their gaming division losses? That you tie those two together now makes even less sense.

THAT has not been quoted in ANY articlle concerning Toshiba's quarterly performance BUT is was for Sony.

And that means it didn't?

Lee, I love how you won't take me on.

Facts, facts, facts is what I am trying.

I know with you it is more like spin, spin, spin, but try it my way - it can be quite refreshing.

I have no idea what you are talking about. You make accusations but present no proof of such.

"Take you on"

Is this the post you want me to take you on ?

And Toshiba want to play with the big boys, a real profit of $68.2m (once one offs are taken out) compared to Sony reporting $551.5m whilst losing about $250m on the PS3.

So you see why Toshiba are so desperate to replace DVD patent royalties.

But they gained profits, so there ya go...

Got a link? Because last I heard Sony's Profits were down 68% (http://biz.gamedaily.com/industry/feature/?id=16171)

It's not just the US. I'd guess Tosh had a smaller share of their income impacted by the Euro than Sony...

You can compare the 3 minth stock graph for Tosh and Sony on yahoo! finance....

Right now Blu-Ray and HD DVD are so small that it doesn't affect the bottom line that much. But the health of the company is important even if it isn't directly related to the formats.

Toshiba had profit growth, therefore they have more money they can toss around. I'll speak specifically in terms of HD DVD. If they are losing money per player (no one has provided a link showing they are) but if they are losing money per player then that cost is easily sucked up by the profit. Whereas if Sony lost profits it is much harder to allocate funds for the advertisement of Blu-Ray.

Excuse me, profits were up 107% for the quarter for Sony Corp. as a whole for Sony Group profits stood at $808m for the same quarter up 268%. Where did they lose profit?

Gaming, sure - but that was always going to happen and pretty much everybody knew beforehand that they would lose some money. Though YoY they are only deeper into the red by about 50% extra and last year there was no PS3 losing them money, this is just a very weak quarter for both gaming and CE products - it always has been.

Got a link? Because last I heard Sony's Profits were down 68% (http://biz.gamedaily.com/industry/feature/?id=16171)

http://www.marketwatch.com/news/story/sony-profit-more-doubles-softer/story.aspx?guid=%7B0EA24E6F%2DCF18%2D405B%2DA9E6%2D005AB2533 E60%7D

Things are really starting to get scary around here now... what is with this ignorance surplus?

And that means it didn't?

Sure . . . like the ficitious losses. You are smart - provide links to either or both - as to your opinion or questions that have no answer. You can't answer an negative question.

You can compare the 3 minth stock graph for Tosh and Sony on yahoo! finance....

What is this - your attempt to change the subject entirely?

Excuse me, profits were up 107% for the quarter for Sony Corp. as a whole for Sony Group profits stood at $808m for the same quarter. Where did they lose profit?


You are the second guy to post this. Clearly neither of you understood that my response was a hypothetical one.

Clearly neither of you understood that my response was a hypothetical one.

Clearly we didn't, since you posted an assertion that last you heard, their profits were down. But there's obviously a *lot* I'm not understanding in this thread. My fault for grasping the world of finance I guess...

You cannot compare Toshiba to Sony. Sony is a much larger corporation than Toshiba. Off the top of my head I believe the difference is over $10 BILLION in sales.

http://www.marketwatch.com/news/story/sony-profit-more-doubles-softer/story.aspx?guid=%7B0EA24E6F%2DCF18%2D405B%2DA9E6%2D005AB2533 E60%7D

Things are really starting to get scary around here now... what is with this ignorance surplus?

Alright damn thanks for the link.

When I post a hypothetical example of how a company up or down can help or harm a format even if the profits are not related to the format itself respond to it. I could of said "If Toshiba" that is why I said "if" don't act in such a condescending manner unless you have read the original post

Alright damn thanks for the link.

When I post a hypothetical example of how a company up or down can help or harm a format even if the profits are not related to the format itself respond to it. I could of said "If Toshiba" that is why I said "if" don't act in such a condescending manner unless you have read the original post

Like I didn't read the original post Michael. :rolleyes:

Your hypothetical situation is fine - I never said it wasn't. But you got the response you did, which was certainly justified, when you posted a link to last quarters financials as some sort of smackdown to my post saying their profits had increased.

Clearly we didn't, since you posted an assertion that last you heard, their profits were down. But there's obviously a *lot* I'm not understanding in this thread. My fault for grasping the world of finance I guess...

MichaelHDDVD posted: Whereas if Sony lost profits it is much harder to allocate funds for the advertisement of Blu-Ray.

Notice I didn't use "if" when Talking about Toshiba because the facts were in the OP. You Sony lovers take everything way to seriously

Sure . . . like the ficitious losses. You are smart - provide links to either or both - as to your opinion or questions that have no answer. You can't answer an negative question.

But tell me how any Japanese company with overseas interests won't benefit from a weaker JPY, a lot of US companies with significant operations in Europe are reporting strong profits because of the weak USD - they won't specifically mention it because one takes it for granted.

The reason weaker JPY is mentioned in third-party write-ups for Sony is that it off-sets losses in the gaming division, slightly.

What does it being quoted in an article matter? Want me to write an article and quote it? I mean what the hell... its yen vs dollars; any sales Toshiba made in the US during the past quarter will receive the same currency boost that Sony's sales received. The only thing I will say is that Toshiba has a lower percentage of its overall sales take place in the US than does Sony, so the currency effect won't benefit them as greatly.

was it an article or was it a financial statement (audited financial and qtr report) there is a huge difference between someone who wrote and article and a qtr filed financial statement

You Sony lovers take everything way to seriously

I take *everything* seriously, because I'm a serious guy. If I was an HD DVD fan, it'd be no different. I happen to be well versed in finance, and when I have to read through post after post after thread of misconceptions, it's like nails on a chalkboard to me.

Like I said earlier in the thread, I'm actually a fan of Toshiba as well, I wish them all the best and have owned many of their products. But it's getting to the point I have to draw out charts in this thread to make some points clear, like how revenues generated by Toshiba in the US will increase by the same amount percentage-wise when repatriated into yen as would any US-derived revenues of Sony's.

But tell me how any Japanese company with overseas interests won't benefit from a weaker JPY, a lot of US companies with significant operations in Europe are reporting strong profits because of the weak USD - they won't specifically mention it because one takes it for granted.

The reason weaker JPY is mentioned in third-party write-ups for Sony is that it off-sets losses in the gaming division, slightly.

Spin, spin spin . . FUD!

Show me the word "slightly" in the article excerpts.

Don't forget that old ditty about glass houses . . . .

A weak yen, which tends to lift the value of overseas earnings for Japanese exporters, also helped, Sony said in a statement.Sales in Sony's core electronics sector climbed 11.6 percent, on strong demand for Cyber-shot digital cameras and Bravia liquid-crystal display TVs, which offset declining sales of rear-projection and conventional TVs.

Quote:
In the Electronics segment, operating income increased 77.3% compared to the same quarter of the previous fiscal year. This was primarily due to a positive impact from the depreciation of the yen versus the U.S. dollar and the Euro, as well as an increase in sales of semiconductors to the Game segment. In the Game segment, the operating loss increased primarily due to the loss arising from strategic pricing of PS3 at points lower than its production cost.

Lee, what is it with you and articles? It's seriously out of control at this point - financials are not your thing. The yen on June 30th of '06 was 116:1, on March 30th '07 it was 117:1, and on June 30th '07 it was 123:1. So in the US, Sony for the quarter made up to 5% more in revenue on a graded scale that they would have otherwise for those three months.

The same as Toshiba during that time.

And if it needs explaining - which I feel it must - the reason such modest revenue-related percentage gains can turn into such large net income effects is that where the product is manufactured and priced to be sold, usually at a very tight margin, by having a revenue increase on the money generated through the sale on an item - where the manufacturing costs remain the same - the margins (and potential net income generated) are greatly improved.

People need to consider the exchange rate of the yen:dollar when thinking about the price cuts Toshiba is making for HD DVD players, because they assuredly wouldn't be this rapid or sharp in the exchange rates were moving in the opposite direction.

Lee, what is it with you and articles? It's seriously out of control at this point - financials are not your thing. The yen on June 30th of '06 was 116:1, on March 30th '07 it was 117:1, and on June 30th '07 it was 123:1. So in the US, Sony for the quarter made up to 5% more in revenue on a graded scale that they would have otherwise for those three months.

The same as Toshiba during that time.

And if it needs explaining - which I feel it must - the reason such modest revenue-related percentage gains can turn into such large net income effects is that where the product is manufactured and priced to be sold, usually at a very tight margin, by having a revenue increase on the money generated through the sale on an item - where the manufacturing costs remain the same - the margins (and potential net income generated) are greatly improved.

People need to consider the exchange rate of the yen:dollar when thinking about the price cuts Toshiba is making for HD DVD players, because they assuredly wouldn't be this rapid or sharp in the exchange rates were moving in the opposite direction.

OK - lets stick to the facts - no spin - no FUD.

According to what has been presented as facts:

Toshiba . . 16% business done in USA . . . . .Sony . . . 25% business done in the USA . . . 9% difference in favor of Sony.

Sony is a larger company than Toshiba if we go by gross sales which everyone does. By about $10 billion. Which put in a percentage means Sony is about 16% bigger.

So when you look at the comparisions using the facts we have. You can easily see where Sony profiting from the Yen vs. USD/EU is going to help Sony a lot more than it did for Toshiba. Also Toshiba's divisions are diverisified towards other markets while Sony pretty much stays in electronics.

I find that super-ironic I must admit. Toshiba is making money off of Sony losing money on the PS3 . . . got a good chuckle.
Me toooooo.

The executives at Toshiba must be laughing so hard they are rolling on the floor

But they gained profits, so there ya go...



Nothing you're saying is making any sense anymore. First of all, I find it strange that you still doubt the presence of a beneficial exchange rate in Toshiba's favor - it really baffles me. It makes me want to write an article on Toshiba's earnings just to point it out to you, since apparently only if written up by the press is a point legitimate. As to your second sentence, what in the world does their ForEx gains made have to do with their gaming division losses? That you tie those two together now makes even less sense.

xbdestroya -- I don't know if you understand accounting / financial analysis, so I'm going to assume from your questions that you don't and explain it. If the explanation isn't needed or you're offended by it, I apologize in advance.

In accounting (and financial reporting) there's this thing called "GAAP" -- Generally Accepted Accounting Principles -- that are laid down by an organization called "FASB" (Financial Accounting Standards Board). Basically, if you're either a U.S. based company or a company that trades on a U.S. exchange (a bit fuzzy on the latter, but pretty sure) there is a requirement that you have published and audited financial statements, and that those financial statement conform to GAAP.

There is a concept under GAAP (that gets abused a lot, btw) called "materiality". Basically this concept says that whatever you're looking at, whether it's a change in practice or method (FIFO to LIFO) or whether it's an outstanding liability (i.e., lawsuit) that you report items that are "material" to the bottom line. So, for example, a $5k pending lawsuit for a fender bender in the parking lot . . . probably not material, doesn't need to be reserved for, and doesn't need to be disclosed in the notes of the annual report. $25mm pending lawsuit for sexual discrimination when the company stands a good chance of either losing or having to settle out of court = material and needs to be reserved for (at some level -- the principle of conservativism would probably say closer to 75% than 25% depending on the odds of losing) and needs to be disclosed in the notes.

How does all of this relate to the discussion at hand concerning Toshiba and Sony and the impact of foreign currency exchange? Well, since Sony is traded on the NYSE, it needs to comply (I think) with FASB, therefore a significant financial impact of foreign currency exchange on it's financial statements needs to be disclosed and noted, which would be picked up by the analysts. It's also entirely possible that the analysts peeled this info out of the actual income statement itself, don't know. Toshiba is a different story, since they're not traded on a U.S. exchange (at least that's what has been mentioned, don't know if it's true) they don't technically need to follow FASB, although as a matter of course many international companies that have a significant presence in the U.S. follow some/much/most of FASB just for good measure, and to boot, have their own financial and accounting regulatory agencies that police their financial reports.

In any case, it's highly unlikely that a significant foreign currency exchange affect cost Toshiba a lot of money or resulted in significant excess earnings and was left off their financial statements or went un-noticed by analysts.

OK - lets stick to the facts - no spin - no FUD.

According to what has been presented as facts:

Toshiba . . 16% business done in USA . . . . .Sony . . . 25% business done in the USA . . . 9% difference in favor of Sony.

Sony is a larger company than Toshiba if we go by gross sales which everyone does. By about $10 billion. Which put in a percentage means Sony is about 16% bigger.

So when you look at the comparisions using the facts we have. You can easily see where Sony profiting from the Yen vs. USD/EU is going to help Sony a lot more than it did for Toshiba. Also Toshiba's divisions are diverisified towards other markets while Sony pretty much stays in electronics.

I'm exhausted from discussing it, and even your point that Sony will benefit more than Toshiba is just a repetition of something I've already stated two times in this thread before. If you are unwilling to recognize the For-Ex benefits that Toshiba enjoyed this past quarter, I'm not going to try and shove it down your throat. But as to that 16% in the US, that's basically all electronics... of course, what would it matter *what* it was, since we're talking exchange rates? But alas...

xbdestroya -- I don't know if you understand accounting / financial analysis, so I'm going to assume from your questions that you don't and explain it. If the explanation isn't needed or you're offended by it, I apologize in advance.

In accounting (and financial reporting) there's this thing called "GAAP" -- Generally Accepted Accounting Principles -- that are laid down by an organization called "FASB" (Financial Accounting Standards Board). Basically, if you're either a U.S. based company or a company that trades on a U.S. exchange (a bit fuzzy on the latter, but pretty sure) there is a requirement that you have published and audited financial statements, and that those financial statement conform to GAAP.

There is a concept under GAAP (that gets abused a lot, btw) called "materiality". Basically this concept says that whatever you're looking at, whether it's a change in practice or method (FIFO to LIFO) or whether it's an outstanding liability (i.e., lawsuit) that you report items that are "material" to the bottom line. So, for example, a $5k pending lawsuit for a fender bender in the parking lot . . . probably not material, doesn't need to be reserved for, and doesn't need to be disclosed in the notes of the annual report. $25mm pending lawsuit for sexual discrimination when the company stands a good chance of either losing or having to settle out of court = material and needs to be reserved for (at some level -- the principle of conservativism would probably say closer to 75% than 25% depending on the odds of losing) and needs to be disclosed in the notes.

How does all of this relate to the discussion at hand concerning Toshiba and Sony and the impact of foreign currency exchange? Well, since Sony is traded on the NYSE, it needs to comply (I think) with FASB, therefore a significant financial impact of foreign currency exchange on it's financial statements needs to be disclosed and noted, which would be picked up by the analysts. It's also entirely possible that the analysts peeled this info out of the actual income statement itself, don't know. Toshiba is a different story, since they're not traded on a U.S. exchange (at least that's what has been mentioned, don't know if it's true) they don't technically need to follow FASB, although as a matter of course many international companies that have a significant presence in the U.S. follow some/much/most of FASB just for good measure, and to boot, have their own financial and accounting regulatory agencies that police their financial reports.

In any case, it's highly unlikely that a significant foreign currency exchange affect cost Toshiba a lot of money or resulted in significant excess earnings and was left off their financial statements or went un-noticed by analysts.

Dhodordy - I'd love to know what I've said that makes you feel I was unaware of GAAP accounting rules, and I spoke directly to the fact that Toshiba's financials are more opaque relative to Sony's due to their non NYSE listing in post #35.

So that said - what are you getting at in this reply to me? The coverage Toshiba receives relative to Sony in English-speaking press is directly proportional to the interest the news organizations have in covering it - and it simply is a much less glamorous entity.

If you disagree with the foreign exchange benefits Toshiba should have enjoyed this past quarter, I am happy to hear your case on the matter. I think a difference here though is from what I see you posting, I've actually read both earnings releases at this point where it seems you have not yet read either.

Lee, what is it with you and articles? It's seriously out of control at this point - financials are not your thing. The yen on June 30th of '06 was 116:1, on March 30th '07 it was 117:1, and on June 30th '07 it was 123:1. So in the US, Sony for the quarter made up to 5% more in revenue on a graded scale that they would have otherwise for those three months.

The same as Toshiba during that time.

And if it needs explaining - which I feel it must - the reason such modest revenue-related percentage gains can turn into such large net income effects is that where the product is manufactured and priced to be sold, usually at a very tight margin, by having a revenue increase on the money generated through the sale on an item - where the manufacturing costs remain the same - the margins (and potential net income generated) are greatly improved.

People need to consider the exchange rate of the yen:dollar when thinking about the price cuts Toshiba is making for HD DVD players, because they assuredly wouldn't be this rapid or sharp in the exchange rates were moving in the opposite direction.

Your point is well taken, if all things are considered equal. A LOT of factors can affect how the same exact exchange rate impacts two companies. One, already mentioned here is the relative size of the two companies and their relative footprint in the country where they are currency advantaged. Sony had $63 billion (USD) in sales in 2006, while Toshiba had $28 billion (USD) in sales in 2006. When we look at the percentages referenced in this thread (I haven't personally checked them to see if they're correct, but I'm assuming they are), approximately 25% of Sony's sales (or $15.75 billion) and 16% of Toshiba's sales ($4.48 billion) came from the U.S. So I guess with those numbers in mind (Sony with 4x dollar value the sales of Toshiba in the U.S.) I don't find it tough, at all to believe that a foreign currency impact was material to Sony and not to Toshiba.

I'm exhausted from discussing it, and even your point that Sony will benefit more than Toshiba is just a repetition of something I've already stated two times in this thread before. If you are unwilling to recognize the For-Ex benefits that Toshiba enjoyed this past quarter, I'm not going to try and shove it down your throat. But as to that 16% in the US, that's basically all electronics... of course, what would it matter *what* it was, since we're talking exchange rates? But alas...

I would like to respond to dhordy's post.

As far as the 16% when you say electronics -Here is what Toshiba sells in the USA:

Consumer Products
Laptop Computers, Projectors, Laptop Accessories, HDTVs, HD-DVD Players, Digital Video Recorders


Business Products Copiers, Printers, Laptop Computers, Projectors, Medical Imaging, Telecommunications, Semiconductors, Hard Disk & Optical Drives, Surveillance & IP Video Products


Industrial Products LED Display Systems, Motors, Drives, Transportation Automation Systems, UPS, Power Systems, Industrial Video Products

I would like to respond to dhordy's post.

As far as the 16% when you say electronics -Here is what Toshiba sells in the USA:

Consumer Products
Laptop Computers, Projectors, Laptop Accessories, HDTVs, HD-DVD Players, Digital Video Recorders


Business Products Copiers, Printers, Laptop Computers, Projectors, Medical Imaging, Telecommunications, Semiconductors, Hard Disk & Optical Drives, Surveillance & IP Video Products


Industrial Products LED Display Systems, Motors, Drives, Transportation Automation Systems, UPS, Power Systems, Industrial Video Products

Lee - but who cares? The exchange rate means 5% more generated on laptops, on printers, on HD DVD players, on motors, on semiconductors... on everything! Why does it matter whether it's electronics or cereal?

Dhodordy - I'd love to know what I've said that makes you feel I was unaware of GAAP accounting rules, and I spoke directly to the fact that Toshiba's financials are more opaque relative to Sony's due to their non NYSE listing in post #35.

So that said - what are you getting at in this reply to me? The coverage Toshiba receives relative to Sony in English-speaking press is directly proportional to the interest the news organizations have in covering it - and it simply is a much less glamorous entity.

If you disagree with the foreign exchange benefits Toshiba should have enjoyed this past quarter, I am happy to hear your case on the matter. I think a difference here though is from what I see you posting, I've actually read both earnings releases at this point where it seems you have not yet read either.

Dude, you need to stop popping the Dianabol like Pez. I was actually trying to help. The reason I made that post, if you must know, is that your line of reasoning seemd to jump around a bit and I couldn't tell what you understood and what you did not understand. You seemed to be arguing that a mention of foreign currency impact on Sony's financials and not on Toshiba's was unimportant or that the only explanation was that Toshiba traded on a non-U.S. exchange (which, quite frankly in my experience isn't really a viable explanation, many if not most non-U.S. reporting requirements are quite robust in my experience). . . to which I attempted to explain the concept of materiality because I felt that at first blush, this issue may have been easily explained by it.

In my most recent post, getting into the detail (and yes, it required me to actually go look up and peruse both Sony's and Toshiba's annual reports -- that's 30 minutes of my life I'll never get back!), given their relative size and market presence in the U.S., I find it totally and utterly believable that Sony benefited significantly more from the JPY->USD exchange rate than Toshiba did.

Lee - but who cares? The exchange rate means 5% more generated on laptops, on printers, on HD DVD players, on motors, on semiconductors... on everything! Why does it matter whether it's electronics or cereal?

You are now arguing for the sake of arguing - we are accomplishing nothing.

We agree to disagree you and I :cool:

Dude, you need to stop popping the Dianabol like Pez. I was actually trying to help. The reason I made that post, if you must know, is that your line of reasoning seemd to jump around a bit and I couldn't tell what you understood and what you did not understand. You seemed to be arguing that a mention of foreign currency impact on Sony's financials and not on Toshiba's was unimportant or that the only explanation was that Toshiba traded on a non-U.S. exchange (which, quite frankly in my experience isn't really a viable explanation, many if not most non-U.S. reporting requirements are quite robust in my experience). . . to which I attempted to explain the concept of materiality because I felt that at first blush, this issue may have been easily explained by it.

In my most recent post, getting into the detail (and yes, it required me to actually go look up and peruse both Sony's and Toshiba's annual reports -- that's 30 minutes of my life I'll never get back!), given their relative size and market presence in the U.S., I find it totally and utterly believable that Sony benefited significantly more from the JPY->USD exchange rate than Toshiba did.

I understand your posts, though I am not an accountant I have been dealing with corporate financials for the last 26 years so I know how to read one . . mostly.

But we have different people here as members and some feel that being right is more important than being correct. There is a difference and we can see it.

Thank you for taking the time that you did to both do the research and the explaining so many here who read this thread will understand and see what is fact and what is simply arguing.

http://www.toshiba.co.jp/about/ir/en/library/er/er2007/q1/ter2007q1e_01.pdf

According to Consolidated Results for the First Quater FY2007 by Segment, the operating loss of the Home Appliances division is 2.6 billion yen. What's the point of this thread?

Dude, you need to stop popping the Dianabol like Pez. I was actually trying to help. The reason I made that post, if you must know, is that your line of reasoning seemd to jump around a bit and I couldn't tell what you understood and what you did not understand. You seemed to be arguing that a mention of foreign currency impact on Sony's financials and not on Toshiba's was unimportant or that the only explanation was that Toshiba traded on a non-U.S. exchange (which, quite frankly in my experience isn't really a viable explanation, many if not most non-U.S. reporting requirements are quite robust in my experience). . . to which I attempted to explain the concept of materiality because I felt that at first blush, this issue may have been easily explained by it.

In my most recent post, getting into the detail (and yes, it required me to actually go look up and peruse both Sony's and Toshiba's annual reports -- that's 30 minutes of my life I'll never get back!), given their relative size and market presence in the U.S., I find it totally and utterly believable that Sony benefited significantly more from the JPY->USD exchange rate than Toshiba did.

Believe me, I have lost a lot more of my life here than you have. ;)

Anyway - sorry if I flipped out on you...

This would be the fourth time I've acknowledged though that Sony has more to gain from the exchange rates than Toshiba does. However, it began by my simply stating that Toshiba benefited at all - and being told repeatedly "no, they didn't - where are the articles saying they did?"

I'm not even in this thread to talk down Toshiba at all is the real tragedy.

How about a tone change in here... congratulations to Toshiba on their improved quarterly results!

You are now arguing for the sake of arguing - we are accomplishing nothing.

We agree to disagree you and I :cool:

Lee, you definitely want to make me kill myself with this... are you saying you disagree with the point that *what* the product is doesn't matter, as they all enjoy the same ForEx benefits?

But hey, whatever. I'm going to go... write an article now. :cool:

Lee, you definitely want to make me kill myself with this... are you saying you disagree with the point that *what* the product is doesn't matter, as they all enjoy the same ForEx benefits?

But hey, whatever. I'm going to go... write an article now. :cool:

This is more of a question than anything else (and it's a question because my earlier description of materiality is probably the limit of my account "expertise" . . . if it can be called that):

How would a firm like Sony or Toshiba account (differently?) for a product built and sourced from components in Japan versus a product that was either entirely built and sourced in another nation (such as China) and then direct-shipped to the U.S.? In other words, wouldn't the relative currency exchange effect in that latter example by YUAN->USD? If so, would that end up showing up as a ForEx affect on say . . . Toshiba's income statement? Or no? Am I getting turned around here?

The reason I'm asking is that there are significantly better YUAN->USD effects to be had (although the JPY is still undervalued, and intentionally so) than JPY->USD effects, and I guess I was under the impression that Toshiba made it's 2nd Gen HD DVD players in China? So, to those who have a better understanding of such things, wouldn't Toshiba be showing a significant ForEx impact in that regard?

This is more of a question than anything else (and it's a question because my earlier description of materiality is probably the limit of my account "expertise" . . . if it can be called that):

How would a firm like Sony or Toshiba account (differently?) for a product built and sourced from components in Japan versus a product that was either entirely built and sourced in another nation (such as China) and then direct-shipped to the U.S.? In other words, wouldn't the relative currency exchange effect in that latter example by YUAN->USD? If so, would that end up showing up as a ForEx affect on say . . . Toshiba's income statement? Or no? Am I getting turned around here?

The reason I'm asking is that there are significantly better YUAN->USD effects to be had (although the JPY is still undervalued, and intentionally so) than JPY->USD effects, and I guess I was under the impression that Toshiba made it's 2nd Gen HD DVD players in China? So, to those who have a better understanding of such things, wouldn't Toshiba be showing a significant ForEx impact in that regard?

I think you're definitely correct in this. For Japan and Euro dollar nations, manufacturing in China is likely becoming much more affordable, since China is pegged to the US dollar.

For the record on Toshiba's cashflow statement, they note an $85 million gain in cash and cash equivalents due to exchange rates. It doesn't speak to what you're saying exactly, but it gives some indication of how Toshiba's backend in general is improved.

http://www.toshiba.co.jp/about/ir/en/library/er/er2007/q1/ter2007q1e.pdf

Seems off topic to me.

Someone asked why I started this thread I believe. I would like to answer that.

Toshiba IS HD DVD. They make almost 100% of the players sold ww with the lone exception of the LG DF player.

I have heard that "Toshiba is losing money on 2nd gen HD DVD players" for quite some time now. And no one is able to provide any proof. So it was my intention to start this thread showing the initial financial reporting by the media - then followup with the hard data which was just released.

This would gve all the chance to look at the financial info provided by Toshiba and see if these losses exist.

Why didn't I do that in the first place? Because I was hoping to discuss Toshiba and it's news and avoid the subject. But it did get brought up - as I knew it would and now . . . hopefully the speculations will stop.

Ever since the price went down from $399 to $299 of the A2 - the rumors and speculation has run rampant with no sign of stopping - 2 months.

Maybe it will stop now. If it continues - then this thread has all the latest financial info and some good posts that will allow it to be used as a reference and as a method to stop the FUD

is anyone going to ever make money on these discs? Or did they blow it?

I mean, with price drops, loss leads, license deals, freebies...

It's not like these players sell at a super high price anymore.

So that $808m (if you include Sony Ericsson and Sony BMG equity) is imaginary then?

On one side you have Toshiba, a second tier manufacturer for most CE goods, but big in semi-conductors and large scale industrial ventures - on the other, Sony - biggest CE company on the planet and huge in entertainment and media, and gaming.

One made $808m this quarter (the weakest in the calendar for any large CE company) the other sold off a division to make $175m. Which would you say is in better shape to wage a war?

What an amateurish comment. Oh, oh. One company is bigger than the other. Big deal. And again what proof that Toshiba is taking a bath on HD DVD?

And again what proof that Toshiba is taking a bath on HD DVD?

Exactly!

No where in this thread does it say they are, or are not making money off HD DVD.

I have heard that "Toshiba is losing money on 2nd gen HD DVD players" for quite some time now. And no one is able to provide any proof. So it was my intention to start this thread showing the initial financial reporting by the media - then followup with the hard data which was just released.


No where in any post in this thread does it state they are making money off HD DVD players. Did I miss something?


hopefully the speculations will stop.


We're speculating they made money off HD DVD players are we not?

No where in any post in this thread does it state they are making money off HD DVD players. Did I miss something?

We're speculating they made money off HD DVD players are we not?

No we are not. In case you haven't figured it out there is a level between making money and losing money - it's called breaking even.

Are we now speculating that they are breaking even? No.

No one said they were making money. MANY here at AVS claim they are losing money . . .. . info is there

Prove it!

MANY here at AVS claim they are losing money . . .. . info is there

Prove it!

According to your first post they made money...I don't disagree with that.

Ever since the price went down from $399 to $299 of the A2 - the rumors and speculation has run rampant with no sign of stopping - 2 months.

Maybe it will stop now. If it continues - then this thread has all the latest financial info and some good posts that will allow it to be used as a reference and as a method to stop the FUD



There is no proof that that they did or did not make money off HD DVD players in this thread.

There is no proof that that they did or did not make money off HD DVD players in this thread.

There is the financial information - they show no losses in the division nor are there any foot notes or notations.

But that also says something. It was noted, by a notation, that they made $85 million on the currency exchange

If they lost $40 million . . $200 loss . . . . or $20 million . . $100 loss - then there should be a notation as was pointed out by a member who has an understanding of financial reporting.

Are they making money - unknown

Are they losing money? - sure isn't listed anywhere and it would be if they were.

I highly doubt that HD-DVD is even profitable for them.

They are taking a sizable hit on every player sold.

You do know that sony has lost 2 BILLION dollars and counting on the PS3 right?

Look at the new Samsung dual format player. They sell Blu-Ray standalone players for $450-499 right now and the dual player MSRP's at $1050! IF HD DVD standalone players cost less than $200 for Toshiba to manufacture Samsung should be able to add HD DVD functionality to a Blu-Ray player for less than $600... That tells me that both HD DVD and Blu-Ray cost about the same to manufacture. LG's player still costs $1200. Nobody else makes an HD DVD standalone player. Why do people think that is? I am going to take a wild guess and say that Toshiba is either breaking even or selling at a loss (I am betting on the loss option) and nobody else either can compete at those prices or wants to try

The reason no one else makes a standalone HD-DVD player is they're waiting or in the process of implementing the broadcom/windows ce reference design.

The HD-A1 and HD-A2 are mor like laptops in CE cases, and only a few companies in the world are equiped to make such complex devices cost effectively.

The main reason you're seeing a cost difference in combo players is because of the value added effects of the one device. None of the combos are being targeted at "average joe", but HT enthusiasts instead, hence markups (both retailer and manufacturer) can and often have to be higher.

The reason no one else makes a standalone HD-DVD player is they're waiting or in the process of implementing the broadcom/windows ce reference design.

The HD-A1 and HD-A2 are mor like laptops in CE cases, and only a few companies in the world are equiped to make such complex devices cost effectively.

The main reason you're seeing a cost difference in combo players is because of the value added effects of the one device. None of the combos are being targeted at "average joe", but HT enthusiasts instead, hence markups (both retailer and manufacturer) can and often have to be higher.

I love these "Armchair" VP's of Manufacturing/Purchasing/Marketing :rolleyes: - don't you?

Where there is smoke there's fire... Toshiba is losing money on the players.

Now I don't have numbers, and I don't have internal company data, but anyone with any logic can figure out they are subsidizing the hardware.. ie, taking a loss.

You HD DVD guys are unbelievable. Seriously. Tell me Sony is losing money on the PS3 or the players, I wouldn't doubt it... for some reason you can't even fathom that Toshiba is taking a bath on the players...

They are probably taking more of a bath than anyone in the BDA. Belief that Toshiba is losing money on the second generation HD DVD players is an article of faith for many Blu-ray zealots. It needs no proof and any data to the contrary is discounted.

Its like arguing a religous point to a converted fanatic.

Its needs no proof to be believed.

Belief that Toshiba is an article of faith for many Blu-ray zealots. It needs no proof and any data to the contrary is discounted.

Its like arguing a religous point to a converted fanatic.

Its needs no proof to be believed.

Kosty:

It is impossible for the BD "supporters" to fathom that Toshiba is not taking a loss when Sony has already lost Billions on the PS3.

I have presented cold hard data. - Toshiba Financials. We have tried to explain to those who do not understand how to read financials - where a loss would appear. We showed them an example of a notation where a windfall profit appears. Financials are not like Forums - you have to report both profits and losses - no FUD allowed.

And they still don't believe it!

Kosty:

It is impossible for the BD "supporters" to fathom that Toshiba is not taking a loss when Sony has already lost Billions on the PS3.

I have presented cold hard data. - Toshiba Financials. We have tried to explain to those who do not understand how to read financials - where a loss would appear. We showed them an example of a notation where a windfall profit appears. Financials are not like Forums - you have to report both profits and losses - no FUD allowed.

And they still don't believe it!

Sony lost billions (of yen) on the PS3 and managed to turn a profit on the quarter. It is entirely possible that Toshiba is doing the same on the HD DVD players. Your article does not go into enough detail on their financials to tell one way or the other. Schrödinger's balance sheet.

Sony lost billions (of yen) on the PS3 and managed to turn a profit on the quarter. It is entirely possible that Toshiba is doing the same on the HD DVD players. Your article does not go into enough detail on their financials to tell one way or the other. Schrödinger's balance sheet.
Even if Toshiba isn't losing money on HDDVD, they surely aren't making any.

Sony lost billions (of yen) on the PS3 and managed to turn a profit on the quarter. It is entirely possible that Toshiba is doing the same on the HD DVD players. Your article does not go into enough detail on their financials to tell one way or the other. Schrödinger's balance sheet.

But Sony's loss was documented for the division - $237 million USD

You think a division can lose $20 million to $40 million and nothing happens? No notations or foot notes?

Even if Toshiba isn't losing money on HDDVD, they surely aren't making any.

I believe they call it; "an investment in the future" Again - only 3 alternatives:

1. Making money
2. Losing money
3. Breaking even.

Two out of three aint bad . . . catchy! (old Meatloaf song) ;)

But Sony's loss was documented for the division - $237 million USD


Yes! I mentioned that. You might want to go reread my first sentence.

Toshiba does not have a divisional breakdown. Their HD DVD division may be losing more money than the PS3 is. I would be stunned since they have not produced nearly as many units.

Yes! I mentioned that. You might want to go reread my first sentence.

Toshiba does not have a divisional breakdown. Their HD DVD division may be losing more money than the PS3 is. I would be stunned since they have not produced nearly as many units.

Did you examine the 5 links that show breakdowns of the financials? Post #13

I am not referencing the OP.

Did you examine the 5 links that show breakdowns of the financials? Post #13

I am not referencing the OP.

I did, and I do not know what division they attribute the HD DVD to.

I did, and I do not know what division they attribute the HD DVD to.

Digital Division. PC's Phones, etc. Electronics Division is TV

Digital Division. PC's Phones, etc. Electronics Division is TV

That division posted a loss.

They do not break it down nearly as far as Sony does so it is hard to figure out how much each segment of the division lost. However, since they list several product lines doing very well, and never mention HD DVD, we can make an educated guess that it is a big factor in the loss.

That division posted a loss.

They do not break it down nearly as far as Sony does so it is hard to figure out how much each segment of the division lost. However, since they list several product lines doing very well, and never mention HD DVD, we can make an educated guess that it is a big factor in the loss.

Your deductive reasoning is sheer speculation. No proof at all

Digital Division. PC's Phones, etc. Electronics Division is TVIt's not Digital Division. Electronics Devices division sells components such as semiconductors, not end products.

http://www.avsforum.com/avs-vb/showthread.php?p=11144125&&#post11144125

It's not Digital Division. Electronics Devices division sells components such as semiconductors, not end products.

http://www.avsforum.com/avs-vb/showthread.php?p=11144125&&#post11144125

The thread does not have all the answers. Here is a list with pictures of the product breakdown right from Toshiba World Wide website. Just click on the second line under Digital:


http://www.toshiba.co.jp/worldwide/about/company/index.html

You're both wrong. HD DVD is included under Digital Products, along with TVs (which means they're not in the Electronic Products).

Interestingly, in the links Lee Stewart provided on the first page, Toshiba does say "Digital Products saw deterioration in operating income", which as far as I can tell means that they took a loss in that division. So, it look like something in that division is pulling it down, but Toshiba doesn't trust the public with the level of disclosure to say whether it's HD DVD or not.

If you look at Toshiba historicals, you can see the Digital whatever division was posting a profit until the second quarter of FY 2006 with the decline in profitability beginning shortly before that.

Anybody want to guess what major product line has been rolled out over the course of the declining profits?

Can we say for certain they are losing money on the HD DVD machines? No, we cannot.

Can we make an educated guess that they are? Yes, we can.

Good catch, Winn. Thanks also go to Lee for providing the information.

You're both wrong. HD DVD is included under Digital Products, along with TVs (which means they're not in the Electronic Products).

Interestingly, in the links Lee Stewart provided on the first page, Toshiba does say "Digital Products saw deterioration in operating income", which as far as I can tell means that they took a loss in that division. So, it look like something in that division is pulling it down, but Toshiba doesn't trust the public with the level of disclosure to say whether it's HD DVD or not.

Really? My post from above:

Digital Division. PC's Phones, etc.

Looks like I said Digital didn't I?

Wow, Mr. Defensive, maybe you should try read the information in my post again.

You were right about HD DVD being in Digital Products and K.L was wrong.
You were wrong about TVs being in Electronics and K.L was right.

Yes, but the digital division seems to have deteriorating income. Care to explain that one Lee?

I personally do not really care but you seem to be screaming the point that Toshiba is making money or at least breaking even on HD DVD players. I find it hard to believe because it is low volume, new technology.

I think all parties involved are taking a loss to create a new market.

Here is a list of all the products in the Digital Division:

Mobile phones.
Liquid Crystal Display TV
HD DVD Player
Digital Audio Player
0.85-inch HDD
Notebook PCs; PC servers.
Electronic Cash Register
Vacuum Cleaner
Business Copy Machines

Toshiba has done very poorly with their LCD HDTV's. They were heavily involved in SED which was settled in Q2 of 2007, where they abandon their efforts. That means all money spent is no longer an investment - now a loss.

Here are Results for LCD sales WW and NA - Q4 2006 and Q1 2007. Toshiba is part of "Others" - not even in the top 5:

http://www.twice.com/article/CA6452180.html

So what you have to do is check EVERY product in the Digital Division - document how it did and then post results here.

This assumption of HD DVD taking a "loss" is still unfounded - just speculation and FUD and Strawman arguments.

So we are now back to the fact that no one knows the state of HD-DVD player profitability other than Toshiba. This places us in the realm of speculation and many will speculate they are losing and many will speculate profit. No one can be said to be correct because we do not know the truth.

So we are now back to the fact that no one knows the state of HD-DVD player profitability other than Toshiba. This places us in the realm of speculation and many will speculate they are losing and many will speculate profit. No one can be said to be correct because we do not know the truth.

I don't agree with you. Just do homework - seek out info. See above post for instructions. And no one has claimed they are making a profit from sale of HD DVD players - but they are the major patent holder on HD DVD so they are getting royalties on each one sold.

My desire . . . . just stop all the speculation - that is all.

Toshiba has done very poorly with their LCD HDTV's. They were heavily involved in SED which was settled in Q2 of 2007, where they abandon their efforts. That means all money spent is no longer an investment - now a loss.Nope, sorry Lee, you'll have to try again. Development of their display devices is listed under Toshiba's Electronics division, production and distribution is under the Digital division. Since SED is in development, not production, these costs aren't from Digital. One excuse down...
Here are Results for LCD sales WW and NA - Q4 2006 and Q1 2007. Toshiba is part of "Others" - not even in the top 5And yet that does not equate to a sales loss. In fact, Toshiba's LCD sales have actually increased significantly (http://www.twice.com/article/CA6456373.html):

Ramirez said that Toshiba’s flat-panel market share has jumped significantly, according to The NPD Group’s retail tracking service TV data. Market research on TV sales, including combos, showed Toshiba nearly doubled its share in the 32- to 42-inch LCD category in April and May 2007.

“Consumers are responding to the quality and design of Regza, but more importantly, they are proving that Toshiba is a market leader in flat panel TV,” Ramirez said.

According to NPD, Toshiba’s share in the 32- to 42-inch screen size grew 90 percent, to 10.8 percent market share, making Toshiba No. 3 in the LCD screen size range, including combos.

Toshiba’s 40- to 42-inch LCD market share grew to 12.7 percent in the period, while its 37-inch share grew 13.2 percent.

So, another excuse down.

So what you have to do is check EVERY product in the Digital Division - document how it did and then post results here.It must have seemed convinent for you that Toshiba doesn't publish that level for detail. Lucky for us, other sources tell us that your excuses are wrong.
This assumption of HD DVD taking a "loss" is still unfounded - just speculation and FUD and Strawman arguments.Let's see:
HD DVD is rumored to be taking a loss, and confirmed to have a lower profit margin.
Digital division has taken a loss since the exact quarter HD DVD was released.
Evidence points to other Digital division products doing well.
There is a line from Ian Fleming's Goldfinger that goes "Once is happenstance. Twice is coincidence. Three times is Enemy Action." It appears that the idea of coincidence has passed.

I don't agree with you. Just do homework - seek out info. See above post for instructions. And no one has claimed they are making a profit from sale of HD DVD players - but they are the major patent holder on HD DVD so they are getting royalties on each one sold.

My desire . . . . just stop all the speculation - that is all.

This sub forum was made for speculation so I doubt it will stop. The one way to stop the speculation would be for Toshiba to issue a statement and I doubt that will happen.

I also believe that profitability is irrelevant at this point. I work in an industry that spends up to a billion dollars on products before they reach market, the vast majority of which never do or fail in the marketplace. This is all done for the possibility of a huge payoff.

HD DVD and BD are in the same situation so they will fund their war chests no matter if the are profitable now or not. Notice I did not name companies because there are many patent holders on both sides.

This sub forum was made for speculation so I doubt it will stop. The one way to stop the speculation would be for Toshiba to issue a statement and I doubt that will happen.

I also believe that profitability is irrelevant at this point. I work in an industry that spends up to a billion dollars on products before they reach market, the vast majority of which never do or fail in the marketplace. This is all done for the possibility of a huge payoff.

HD DVD and BD are in the same situation so they will fund their war chests no matter if the are profitable now or not. Notice I did not name companies because there are many patent holders on both sides.

OK . . . last post on this thread for me . . .

We agree to disagree.

You stated that they would have a footnote if HD DVD had big losses. Then you state that the profitability erosion in the Digital Division is due to LCD issues.

Why no footnote to this effect in the Q report?

We also need to add in all the marketing costs that Toshiba is incurring. They do not advertise DVD so this is an extra expense not incurred if HD DVD was not launched.

All right - THIS will be my final post.

Now we will use math instead of FUD:

15 Months - HD DVD has been around. Financials are for last quarter. At the end of June they announced 180,00 players sold SID - 80,000 in the quarter.

Pick a number - $100 loss per player = $8 million . . . $200 per player = $16 million . . .$300 per player = $24 million

Toshiba is a $50 BILLION Company!

ALL other "losses" like the A1 - ancient history - 2006 - already accounted for.

IF and I say IF Toshiba is losing money on the A2 is pales in comparision to the BILLIONS OF DOLLARS Sony has lost/is losing on the PS3.

End of post.

All right - THIS will be my final post.

Now we will use math instead of FUD:

15 Months - HD DVD has been around. Financials are for last quarter. At the end of June they announced 180,00 players sold SID - 80,000 in the quarter.

Pick a number - $100 loss per player = $8 million . . . $200 per player = $16 million . . .$300 per player = $24 million

Toshiba is a $50 BILLION Company!

ALL other "losses" like the A1 - ancient history - 2006 - already accounted for.

IF and I say IF Toshiba is losing money on the A2 is pales in comparision to the BILLIONS OF DOLLARS Sony has lost/is losing on the PS3.

End of post.

I agree Sony is losing more money as they have higher sales. I guess we could agree on the fact that no one is worried about short term since long term is such a huge payoff. That is a restatement of my post above that you disagreed to.

We may also be able to agree that money lost or gained at this point is irrelevant to the the war in general. Toshiba is a $50 billion company and Sony is bigger so the numbers are just a drop. I am sure both companies planned to lose money in the first few years anyway. Consoles usually do and new formats are expensive to launch.

Can we agree that it does not matter?

All right - THIS will be my final post.

Now we will use math instead of FUD:Considering your history with math here, this is a shaky statement.
15 Months - HD DVD has been around. Financials are for last quarter. At the end of June they announced 180,00 players sold SID - 80,000 in the quarter.
The Digital Products division (including HD DVD) 1Q07 losses were 2.3billion yen, a drop of 4.3billion yen from the same time last year, which just so happened to be when HD DVD was released.
Pick a number - $100 loss per player = $8 million . . . $200 per player = $16 million . . .$300 per player = $24 millionUsing the 2.3billion yen figure, we get a 1Q07 loss of ~19.4m dollars, or around $245 per player.
IF and I say IF Toshiba is losing money on the A2 is pales in comparision to the BILLIONS OF DOLLARS Sony has lost/is losing on the PS3.Well, that wasn't the point of your original post or those that followed. Not that it matters, because Sony's losses were offset by income from other areas. What you also fail to mention is that Toshiba is essentially taking on the loss themselves, since they're the only ones making hardware. But for Blu-ray there's 5 other companies making hardware. In addition, Sony may be taking a bath on the PS3, but their consumer electronics division (the ones actually working on Blu-ray and releasing standalones) did fantastic, in fact, many times better than all the other divisions.

Your "math" aside, HD DVD is Toshiba, and the division responsible for HD DVD is losing money. The same can not be same Blu-ray, because they're diversified amongst several companies, and are buffered from the losses of Sony's game division.

Blu Ray = PS3 without PS3, BD is a dead format. All BD vendors pay Sony for using the BD name and logo...and Sony will lose over $2B on the PS3 alone. Almost everything Sony is doing is to promote the PS3 as a BD movie rather than as a game console. The Sony CE divisions role in ensuring the success of BD is very very very small. Why even the G1 player was outsourced to Pio, who knows if the current one is as well..

The Sony division that made money did so due to TVs and cameras and because they did little to promote BD. The game division is shouldering the costs....

Tosh numbers were OK not, great, so was Sonys. Overall Tosh stock has done beter than Sony recently which would indicate that market analysts see more upside in Toshs overall business model.

The goal of BD is to replace DVD within the next 3 years. The question is whether so far they have achieved anything in advancing that goal....for the $billions spent? Success is a relative term and having a couple of thousand more avg. sales per title than HD DVD at this point, after this sort of expenditure is not a joke. To me the strategy seems to failing when purchasing an end cap is made into a major PR story!

JBlacklow:

Products from Digital Division:

Mobile phones.
Liquid Crystal Display TV
HD DVD Player
Digital Audio Player
0.85-inch HDD
Notebook PCs; PC servers.
Electronic Cash Register
Vacuum Cleaner
Business Copy Machines

So you are saying with sales of 80,000 players - $245 loss on each = $20 million. And TV sales were up and doing well . . according to you. That no other products from the list above lost money - only HD DVD. - that doesn't add up. TV's are $1000+ priced items.

Sony "profit issue"

Please explain to me what the red hightlighted means (make note of the word "to") in the below quote:

Sun Sentential:
"In the Electronics segment, operating income increased 77.3% compared to the same quarter of the previous fiscal year. This was primarily due to a positive impact from the depreciation of the yen versus the U.S. dollar and the Euro, as well as an increase in sales of semiconductors to the Game segment. In the Game segment, the operating loss increased primarily due to the loss arising from strategic pricing of PS3 at points lower than its production cost."

Correction: Toshiba is a $60 Billion Company. Sony is a $70 Billion Companny

The goal of BD is to replace DVD within the next 3 years. The question is whether so far they have achieved anything in advancing that goal....for the $billions spent? Success is a relative term and having a couple of thousand more avg. sales per title than HD DVD at this point, after this sort of expenditure is not a joke. To me the strategy seems to failing when purchasing an end cap is made into a major PR story!

What is Toshiba's goal? Have they made progress either?

If I worked for a marketing company, I would rather be working on BD than HD DVD right now...although, as you said, the future is unwritten.

I highly doubt that HD-DVD is even profitable for them.

They are taking a sizable hit on every player sold.
Sony is taking a bigger hit.. The PS3 cost a little over 900 to make..

Sony is taking a bigger hit.. The PS3 cost a little over 900 to make..Or not.

http://www.next-gen.biz/index.php?option=com_content&task=view&id=6573&Itemid=2
Sony Aims for PS3 Break-Even This Year

By Kris Graft Print

Sony currently incurs an estimated $200 loss on every PlayStation 3 sold, but an exec from the firm said today that loss could be eliminated this fiscal year.
During a conference call Sony executive VP Nobuyuki Oneda said the firm may be able to break even on PS3 hardware this fiscal year, which ends in March 2008.

He said that the main cost-downs would have to occur in the Cell processor, RSX graphics chip and Blu-ray optical components.

“The removal of the negative margin will be when all of these factors have come out. Maybe, marginally, we could achieve this during this year,” Oneda told a Citigroup Securities analyst during a Q&A session. Oneda still couldn’t specify exactly when this break-even point may happen.

“For the negative margin to go away, the big trigger would be the cost-down in the Cell and RSX semiconductors. They are the key, and also optical pick-up is another factor, significantly,” he said.

Oneda confirmed that Sony is working on transitioning the PS3’s chips from 90nm to 65nm, which would reduce costs significantly. He said the Cell would be the first PS3 chip to make the migration, followed by the RSX chip.

Game console makers typically sell hardware at a loss, and make up for this through software sales. Nintendo, however, has made it a point to sell its hardware at a profit.

Or not.

http://www.next-gen.biz/index.php?option=com_content&task=view&id=6573&Itemid=2

Here is the isuppli article that shows the teardown costs of the PS3. According to them the complete motherboard with components is $500. How much is this going to drop? According to your article?

http://www.isuppli.com/news/default.asp?id=6919

As far as I can tell Toshiba's Q1 report doesn't even mention HD DVD.

What's the point of this thread again?

As far as I can tell Toshiba's Q1 report doesn't even mention HD DVD.

What's the point of this thread again?

What do you think they just forgot to include it in their reports? Just because it's not mentioned by name means nothing. You can be assured the numbers are a part of the overall report.

It is funny that Playstation 3 sales contributed to Toshiba's profit but no mention was made of HD-DVD sales contributing. Very ironic.

Indeed. :D

What is also funny is that Sony needs lower pricing for the cell chip Toshiba makes to get the PS3 into the black. Now that is a strange position to be in for both companies.

But for Blu-ray there's 5 other companies making hardware. In addition, Sony may be taking a bath on the PS3, but their consumer electronics division (the ones actually working on Blu-ray and releasing standalones) did fantastic, in fact, many times better than all the other divisions.

First of all sony CE has essentially nothing to do with winning or pushing BD. Sony sold what 10K BD players other than the PS3. Plain and simple without the PS3 BD would be stillborn. The fact that there are 5 companies doesn't matter in terms of pricing because only Sony and Toshiba are motivated enough to cut prices to the levels that matter. i.e if Sony didn't have a BD in PS3 this war would be over. If Toshiba hadn't manage to keep increases hardware sales with low prices the war would be over. If HD DVD wins I have no doubts the other CE companies will release an HD DVD player. They simply are not going to risk their bottom line to help Sony prevail over Toshiba.


HD DVD is Toshiba, and the division responsible for HD DVD is losing money. The same can not be same Blu-ray, because they're diversified amongst several companies, and are buffered from the losses of Sony's game division.

Not sure what you are trying to imply. If one division of Toshiba (which is a consolidtion of over 300 subsidiary companies) is losing money then somehow it is worse than if a division of Sony is losing money?

The only thing making this a format war is the PS3 and Sony is burning through cash at a record pace. The PS3 has cost Sony about $2.5 billion and growing. The price cuts to stimulate demand while losing money on each system will only deepen the wound.

There is nothing in the balance sheet that shows us Toshiba is losing money on HD DVD players. Even if they are it is neglible compared to their balance sheet.

For argument sake let's just say Toshiba is losing $200 on a HD player and Sony is losing $200 on the PS3. Now here is the kicker since the PS3 has an attach rate about 1/5th that of a standalone that means Sony is losing nearly $1000 vs $200 for Toshiba to generate same amount of sales.

We haven't even seen price cuts from Sony's competitors yet. The Wii is selling out so why cut prices if people buy every unit available for sale? The 360 is waiting to cut prices after Halo. If this Christmas the 360 is 199/299 and the Wii is 249 and the 60GB ($499) are sold out Sony will not be looking good.

A $599 80GB unit will collect dust. Sony likely be required to extended the pricecut from the 60GB to the 80GB unit and even then $199/$299 vs $249 vs $499 doesn't really look like a deal. Another $100 higher loss per system. Everyone laughed that Microsoft lost $4 billion in 4 years on the original xbox. Sony at this pace will lose $4 billion in half the time.

Just came across the following newsflash:

Toshiba has just reported a revenue and profit growth for the first half of its fiscal year 2007 (first half has ended in september).

Net income rose to 45.7 Billion Yen (an increase of 17% compared to 1st half of FY2006).

Here is the link to the earnings statement: http://www.toshiba.co.jp/about/ir/en/library/er/er2007/h1/html/ter2007h1e_30.htm