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To: Tenchusatsu who wrote (121112)	12/7/2000 2:17:45 PM
From: Scumbria	Read Replies (3) \| Respond to of 186894

Ten, Sony loses lots of money on PS2 sales. They make money on game sales. You should be aware of this, since the CEO gave a presentation describing their business model at 1999 MPF. Scumbria

To: Tenchusatsu who wrote (121112)	12/7/2000 2:31:32 PM
From: FJB	Respond to of 186894

<Sony is already bleeding red with their very expensive hardware.> Nice try. PS1 is a huge cash cow for Sony, and it has been for the past five years. PS2 is made to be Sony's huge cash cow for the next five years. A loss leader on hardware for the first few years is nothing compared to the profits Sony is making and will continue to make on licensing. biz.yahoo.com Morningstar.com PlayStation 2 Costs Slash Sony's Profits By David Kathman What Happened? Electronics and entertainment giant Sony (NYSE: SNE - news) on Thursday reported that its net income for the September quarter fell 57% from a year ago, coming in well below analysts' estimates. Strong sales and profit growth in the company's electronics division were offset by losses in its game, music, and movie units. Costs associated with the rollout of the hotly anticipated PlayStation 2 game console contributed to the losses, and weak sales of Sony's software titles were also a factor. Sony said that the game division, once the company's cash cow, will continue to lose money over the next two quarters as the company presses an extra factory into service to meet demand for PlayStation 2 units. What It Means for Investors The troubles in Sony's game division are short-term and no cause for undue concern, but we still believe that there are too many uncertainties in Sony's long-term strategy to justify the stock's lofty valuation. PlayStation 2 is a key element of the company's ultimate plan to deliver Sony-produced entertainment content over high-speed Internet connections to a variety of Sony-made platforms, including game consoles, computers, and handheld devices. But that plan won't pay benefits until high-speed access becomes more widely available, and in the meantime such competitors as America Online (NYSE: AOL - news)/Time Warner (NYSE: TWX - news) and Microsoft (Nasdaq: MSFT - news) are busy with broadband strategies aimed squarely at Sony. Even if its game division recovers next year--and that seems likely, given the huge demand for PlayStation 2--a big chunk of Sony's current market value depends on this long-range Internet-based strategy for integrating hardware and content. However, the future in this area is still very uncertain. Not only is the competition fierce, but new technologies such as Napster have cast doubt on Sony's ability to control its content in the digital age. We think these uncertainties make Sony's current P/E of 70 look excessive.

To: Tenchusatsu who wrote (121112)	12/7/2000 2:32:15 PM
From: FJB	Respond to of 186894

<Sony is already bleeding red with their very expensive hardware.> Nice try. PS1 is a huge cash cow for Sony, and it has been for the past five years. PS2 is made to be Sony's huge cash cow for the next five years. A loss leader on hardware for the first few years is nothing compared to the profits Sony is making and will continue to make on licensing. biz.yahoo.com Morningstar.com PlayStation 2 Costs Slash Sony's Profits By David Kathman What Happened? Electronics and entertainment giant Sony (NYSE: SNE - news) on Thursday reported that its net income for the September quarter fell 57% from a year ago, coming in well below analysts' estimates. Strong sales and profit growth in the company's electronics division were offset by losses in its game, music, and movie units. Costs associated with the rollout of the hotly anticipated PlayStation 2 game console contributed to the losses, and weak sales of Sony's software titles were also a factor. Sony said that the game division, once the company's cash cow, will continue to lose money over the next two quarters as the company presses an extra factory into service to meet demand for PlayStation 2 units. What It Means for Investors The troubles in Sony's game division are short-term and no cause for undue concern, but we still believe that there are too many uncertainties in Sony's long-term strategy to justify the stock's lofty valuation. PlayStation 2 is a key element of the company's ultimate plan to deliver Sony-produced entertainment content over high-speed Internet connections to a variety of Sony-made platforms, including game consoles, computers, and handheld devices. But that plan won't pay benefits until high-speed access becomes more widely available, and in the meantime such competitors as America Online (NYSE: AOL - news)/Time Warner (NYSE: TWX - news) and Microsoft (Nasdaq: MSFT - news) are busy with broadband strategies aimed squarely at Sony. Even if its game division recovers next year--and that seems likely, given the huge demand for PlayStation 2--a big chunk of Sony's current market value depends on this long-range Internet-based strategy for integrating hardware and content. However, the future in this area is still very uncertain. Not only is the competition fierce, but new technologies such as Napster have cast doubt on Sony's ability to control its content in the digital age. We think these uncertainties make Sony's current P/E of 70 look excessive.