Could somebody explain me some facts regarding Sony’s last 2007 Income Statements?

Question

How can it be that Sony’s profit margin is only 0.86%? I am sure this is related to Sony’s COGS and operating expenses but I just can’t see what huge COGS would a consumer electronics company have (is it that expensive to get the materials to build them?).

I would also apprceiate any additional information/explanation.

Answer 1

Where do you get that 0.86% margin from?  If that's the case then Sony is a horrible company and should look to get into other lines of business.  

Keep in mind that Sony breaks up their operations into four separate businesses; electronics, gaming, movies/TV, financial services.  

You might be looking at only their gaming business.  The margins are extremely tight on gaming consoles.  I know Microsoft loses money on their Xbox as they fight for greater market share.  This is a short term strategy since no one can lose money for too long, but with Sony, Microsoft, and Nintendo fighting for market dominance they got the deep pockets to fight it out for quit a while.  Then, once one of them becomes the dominant player then they can work on their margins as the other companies fade away from their gaming businesses.