Sony's deadweight divisions drag down PlayStation 4

All of those PlayStation 4 dollars are still not enough to put Sony back together again.

The Japanese corporation reported the results of its fiscal 2014 this morning, and the company ended with a $1.25 billion net loss. That’s on revenue of $75.41 billion, which is up 14.3 percent year-over-year. During the year, Sony spent heavily on research and development costs as well as marketing the PlayStation 4, but the November launch of the new console recouped much of that cash. Sony Computer Entertainment generated $9.51 billion, which is up 38.5 percent from $6.92 billion in fiscal 2013.

Despite that significant increase, the gaming division of Sony experienced a $78 million operating loss, which is actually down from 2013’s modest net income of $16.7 million. That was due to the aforementioned expenses as well as slowing PlayStation 3 sales and a $60 million write-off on certain games sold by Sony Online Entertainment.

Looking forward to fiscal 2015, Sony’s situation looks like it will improve mildly. The company is forecasting revenue of $76.6 billion, which is largely flat year-over-year, but it expects to only lose $489 million largely thanks to cutting R&D and marketing costs.

For the first time, Sony will also combine its gaming and network services, which includes Sony Network Entertainment. The corporation expects this new group to generate $11.78 billion, which is a 16.9 percent increase over the combined sales for both divisions in 2014.

In fact, the company expects all of its divisions to generate positive income in fiscal 2015, but its corporate costs will still drag it into the red.

Since November, Sony has sold 7 million PlayStation 4s. That is better than Microsoft’s Xbox One (at only 5 million shipped to stores) and Nintendo’s Wii U (with 6.2 million Wii U consoles sold since November 2012). Nintendo is also struggling while Microsoft is making billions of dollars annually thanks to a number of profitable divisions.

Sony is in a transitional phase. Chief executive officer Kaz Hirai is dropping products that do not fit into his three-tiered vision of the company. Those pillars, which he will focus on to turnaround Sony, only include cameras, smartphones, and PlayStation.

In February, Sony announced it would sell its Vaio PC business in an effort to eliminate costs. The company is instead planning on turning its focus to the growing mobile market, where it has a handful of high-end smartphones.

Hirai also revealed plans to spin-out the Sony television business — once one of its best-earning divisions — to make Sony more efficient overall. The company saw a huge boost in television sales throughout the early 2000s as consumers rushed to upgrade to high-definition, but sales slowed, and that is the leading contributor to Sony’s current financial position.

At the same time as the Vaio and TV moves, Sony laid off 5,000 employees.

If Sony does end up with another net loss for fiscal 2015, that’ll make six years out of the last seven where the company lost money.