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Reader Comments (19)

Posted: May 23rd 2011 11:10AM WyattEarp89 said

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Don't really no what to say... other than ouch!

Posted: May 23rd 2011 11:17AM Space Cobra said

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Yeah, lots of people saying, "Ouch!"

This seems to be over the entire company, but most likely (?) the games branch (they note manufacturing AND online).

Posted: May 23rd 2011 11:18AM Ryn said

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My fear is that this could happen to a smaller indie company that doesn't have the resources to handle an attack like this. I hope all game companies are looking hard at this and taking the necessary steps to protect themselves. This could have put a smaller company out of business.

Posted: May 23rd 2011 11:26AM (Unverified) said

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@Ryn It seems unlikely they would put the time and effort towards a smaller indie company. Think of the hackers like bank robbers. It doesn't make much sense to plan a bank robbery only to hold up a 7-11 on the way there.
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Posted: May 23rd 2011 11:38AM Syesta said

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The bottom lines for a lot of Japanese companies, especially those with logistics and manufacturing facilities in Northern Japan that were directly impacted by the Tohoku quake and tsunami, are going to be very rough.
Luckily for them, a ton of capital is getting poured directly back into the Japanese economy by nationals redirecting their once-foreign interests. The next 2-3 years will more than likely see wildly shifting financial results.

Posted: May 23rd 2011 12:15PM Zantom said

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It is unfortunate and I really do feel bad for them. I hope they can pull out of the crisis. Though at the same time I would be very happy if Vanguard and SWG ended up being sold off to developers that love and market those games :)

I know, wishful thinking...

Posted: May 23rd 2011 12:17PM Saerain said

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Too much money. Does not compute.

Posted: May 23rd 2011 12:47PM Enikuo said

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"is mostly due to writing off a $4.4 billion tax credit" - what does that mean? Did they lose a $4.4 billion tax credit? Why did they lose it? What kind of tax credit even amounts to $4.4 billion?

Posted: May 23rd 2011 3:13PM Enikuo said

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@Tempes Magus A tax write-off is different from a tax credit, which just makes the statement even more confusing. A write-off is a reduction in value of whatever is being taxed. A tax credit is some specified amount that is subtracted from the amount of tax owed, usually when you meet some condition. Can you write off the loss of a tax credit? That doesn't make sense.
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Posted: May 23rd 2011 3:20PM ImperialPanda said

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@Enikuo

Basically, it means Sony does not expect to earn money in the forseeable future. Which is why they're removing an expected tax benefit resulting from current and past losses.

If you want to learn a little more, google "deferred tax asset" and "valuation allowance."
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Posted: May 23rd 2011 8:10PM Enikuo said

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@ImperialPanda That's very helpful. Thank you!
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Posted: May 23rd 2011 12:48PM (Unverified) said

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The summary is mixing up two different concepts. The $3.2B loss was in the previous fiscal year while the disruptions caused by the earthquake and hackers happened in the current fiscal year. They had nothing to do with the $3.2B loss.
In fact it wasn't even a true loss, It was a tax write off. If they wrote off $4.4 B and only lost $3.2 B then they actually made a profit of $1.2B. But the way they report their earnings they can avoid paying any taxes on that profit by reporting it as a loss. Sony is doing just fine financially.

Posted: May 23rd 2011 3:26PM (Unverified) said

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@Tempes Magus
You are right in that it is a gain but it is offset by the fact that they took an expense or several expenses worth $4.4 billion and took the hit all in the same fiscal year rather than letting it depreciate over several years. The government then gives a one time tax break for that amount but the corporation doesn't have to claim that as operating income.

So the $4.4 billion was calculated as an expense and came off their income sheet but the tax credit can just cancel out the taxes they would have paid on any profits made that year. You are right it is very confusing but also very common in manufacturing and telecom industries that have large equipment costs that can be easily credited.
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Posted: May 23rd 2011 3:32PM ImperialPanda said

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@(Unverified)

The 4.4B is a valuation allowance against deferred tax assets. The tax loss carry over period in Japan is seven years, and the three years of losses presents negative evidence against Sony's ability to realize those tax assets. Sony has to establish a valuation allowance if they feel that is more than likely (>50%) that a portion or all of their deferred tax assets will not be realized.
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Posted: May 23rd 2011 3:48PM Space Cobra said

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@(Unverified)

Some more info about the tax thingie from a poster over at the sister site, Joystix (via this link):

http://www.joystiq.com/2011/05/23/psn-breach-and-restoration-to-cost-171m-sony-estimates/#comments

Quote:

"Starcade responds @Vidikron

I read the report this morning, and they said the 3 billion dollar loss was the result of a 4 billion dollar tax credit applied the prior quarter. Seems to me their prior quarter wasn't as rosey as we thought, and sounds like they used some accounting tricks to make it appear better than it was, but then had to eventually write it off. Yes they cite the disaster in Japan, which defintely is a factor and PSN, but I believe both events will impact -future- Sony financials, not their financials that ended in March. I have to believe the economy played a huge part in this, and that exporting to the U.S. isn't as profitible as it once was. "
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Posted: May 23rd 2011 3:54PM ImperialPanda said

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@Space Cobra

Of course both events affect future profitability. Which is why they backtracked on expected tax benefits which they thought would be realized in the future.

...? I don't see how any "accounting tricks" were used.
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Posted: May 23rd 2011 1:01PM Weiji said

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I guess you won't be cutting corners in your security anymore, will you Sony.

Sounded like PSN won't be up in Japan anytime soon either, so I imagine they will still be bleeding money for the coming weeks.

Posted: May 23rd 2011 2:05PM (Unverified) said

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@Weiji

Isn't it amazing that the U.S. and other countries just let Sony keep on rolling with no problem while Japan, Sony's home country, is actually demanding proof that the company has fixed its issues before giving it permission to operate the PSN again?

Japan seems to be the only country that really does care about its consumer population.
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Posted: May 23rd 2011 2:07PM Elikal said

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No matter what universe you come from that's gotta hurt!

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