Sony is ready to flog its sky-scraping US HQ in Manhattan for $1.1bn to get hold of some much-needed cash. After debts on the building have been settled up, the entertainment giant expects to walk away with $770m - that's $685m more than it paid for it in 2002. However, by way of comparison, the firm recorded a $5.7bn net loss …
Apparently the real estate bubble in NY and elsewhere is back in full swing. Now is the time to sell before the next big pop and wealth destruction bonanza.
Re: Good plan
I'm hoping Kim Dotcom is the buyer, and he is going to turn Manhattan into some sort of Tracy Island from which he can sit beneath this building in front of a wall of video screens, stroking his cat and running his evil empire.
Somehow he can escape capture from the US government at the end of each episode so we can all enjoy "moar lulz" at their expense. Perhaps John McAfee and Julian Assange can rock up there at some point too.
Am i reading this correctly?
They are selling a building for $1.1bn for which they only paid $85m for in 2002.
I knew property inflation was significant but not to that extent.
Re: Am i reading this correctly?
High prices seem to be the norm. The US stock and bond markets are at, or near, all-time highs. Agricultural land in the US is at all time highs. The Contemporary Art market in New York is booming with record sales and high prices. The real estate markets in Manhattan and Washington, DC, are both at all-time highs as the Austrians would predict. That is, after all, where the money is being created, and the place where much of it is injected into the economy.
This doesn’t even consider what prices would be like if the Fed and world central banks had not acted as they did. Housing prices would be lower, commodity prices would be lower, CPI and PPI would be running negative. Low-income families would have seen a surge in their standard of living. Savers would get a decent return on their savings.
Of course, the stock market and the bond market would also see significantly lower prices. Bank stocks would collapse and the bad banks would close. Finance, hedge funds, and investment banks would have collapsed. Manhattan real estate would be in the tank. The market for fund managers, hedge fund operators, and bankers would evaporate.
In other words, what the Fed chose to do ended up making the rich, richer and the poor, poorer. If they had not embarked on the most extreme and unorthodox monetary policy in memory, the poor would have experienced a relative rise in their standard of living and the rich would have experienced a collective decrease in their standard of living.
Re: Am i reading this correctly?
They bought it for $236M. Selling for $1.1M. $864. Minus debt = $770M profit from the deal.
The $685M is reported to be "operating income" on Sony's income statement, probably just an accounting trick.
The $770M isn't anything to sneeze at... but it doesn't mean it's all "property inflation". It doesn't take into account how cash you've put into the building.
For instance, say you buy an apartment for $500K. You put $250K, cash, into swanky updates. For some reason, you have to sell and can only get $750K. Well, you sold for $250K more than you paid for it... but you only broke even since you put $250K into the place. If you include the fees, you probably lost money on the sale.
this news is great and all
But why the f__k has the PS Live network now been down for over 24 hours. All so they can upgrade their store app to try and be like Apple (does that really requiring killing all online gaming?). Sony still hasn't figured out that when you care alot more about taking money from customers than making them happy they go away and you lose billions for five years straight and are in danger of disappearing.
but their managers got their bonus
This is one reason why I have issues with companies that give large bonus' to managers. You do what you need to do to get the cash flow up so you get a big bonus. Why worry about next year? You have no reason to believe you will have a job anyway.
I have worked for companies that had a good business model and were making money. About five years after going to a bonus program for their managers they are shadows of their former selves if not bankrupt.
Re: this news is great and all
"But why the f__k has the PS Live network now been down for over 24 hours. All so they can upgrade their store app to try and be like Apple (does that really requiring killing all online gaming?)"
Not just gaming, also stopped anyone watching Lovefilm or Netflix on their PS3 for a little shy of 48 hours as for some reason those apparently also can't operate without a connection to the mothership.
Maybe it was all to do with selling their HQ and needing to wait in for someone to come and turn on the broadband in their new home. :-)
"carefully selecting investments, selling assets and strengthening control of working capital such as inventory."
Is it possible that Sony made, or is still making, the same mistake that everyone who used their house as a checkbook in the run up to the great economic dry heaves of late? Somehow I doubt it and this is PR using the term asset to mean a money sink that some other fool will think is valuable. Let's be honest, on the balance sheet the real difference between an investment and an asset is pronunciation just like the twins liabilities and expenses on the other side. Put another way one side is the stuff that makes money and the other side is the stuff that takes money.
A corporate HQ is just like your house and it shouldn't be placed on the asset side of the sheet ever because it doesn't produce an income. I know some folks like to think the value goes up and therefore it's an investment but it isn't because you have to live somewhere and if you're lucky the best you get is to sell the big house, move into a small house and hopefully have some cash left to visit [insert warm place or grandkids here] every year. Sony has the same issue, the McMansion they bought it a little too big for them to handle so they are going to move to a cheap cottage they can afford. It's an indication that unless Sony can turn it around, these are their twilight years.
> on the balance sheet the real difference between an investment and an asset
The balance sheet has assets ["stuff"] on one side and liabilities/equity ["whom the stuff belongs to"] on the other side. Hopefully most of the stuff on any side is an investment for someone.
> Put another way one side is the stuff that makes money and the other side is the stuff that takes money
That's not how a balance sheet works, hon.
> A corporate HQ is just like your house and it shouldn't be placed on the asset side
Being an asset means it will be placed on the asset side otherwise the good ole governement will whip your arse for tax evasion
For the remainder of the problem, see "fair and prudent evaluation", "deprecation" and "write-offs".
"otherwise the good ole governement will whip your arse for tax evasion"
As a product of public education in the US, I don't do my taxes anymore because it is now sufficiently complex and changes so often it is more cost effective for me to hire a specialist and I'm lucky enough to have a family friend who is a recently retired IRS auditor who does it for a nominal fee and a fancy dinner.
Another Company who tried to build a walled garden (nearly) bites the dust. Will they never learn?
Re: Ho hum
You're somewhat conspicuously ignoring the Apple-shaped elephant in the room you just made that statement in.
Re: Ho hum
Duh. Sony are selling at a monster profit. If you want a look at how a dying company sells its HQ, try Nokia.
Unfortunately the building is not compatible
Naturally Sony's former headquarters is incompatible with the surrounding infrastructure, traditional phone, power and water systems, and traditional office furniture. The IT infrastructure is locked down in such a way that the buyer can take possession but only Sony can truly control it. As such it will be marginably habitable but to get full advantage of their purchase the buyer will have to throw the building away and buy a new generic building from another vendor.
Re: Unfortunately the building is not compatible
For a few seconds, I though that you were full of shit, it wasn't until I hit the hidden <sarcasm> tag, did I realize where you were going with that one.
Nice cheap shot!!!!!
Re: Unfortunately the building is not compatible
This partly sums up why I stopped buying Sony. That and things like hidden, secretly installing programs on CDs, their whole DRM crusade etc. I would always buy Sony stuff as it lasted for years and was good quality stuff. That changed around ten years ago when their attitude towards customers really started to stink. I genuinely wonder how many other people they have ****ed off with this attitude.
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