William Trent_

Sony Admits It Made the PS3 Too Expensive

Actually I was comparing Sony's build it and they will come attitude to that of WorldCom, which also supposedly had tons of cash and wouldn't go bankrupt.

As to the possibility Sony will follow in their footsteps, it is certainly unlikely any time soon. However, they don't have any "surplus cash." Their cash and investments (some of which could be converted to cash quickly, others not) total $10.5 billion, just a smidgeon more than their total debt.

Meanwhile, sales have fallen 10% over the last three years and cash flow from operations has been cut in half. In the fiscal year that ended in March 2006 they used half-a-billion more to buy the equipment needed to run their business than they actually generated from the business - and that after spending less than they had spent the prior two years.

Such a trend would be one thing for a fast-growing startup. But for a mature (and actually declining) business it is poison. If the trend continues to get worse, or even simply stays the same, the company will either go bankrupt or be forced to sell more of its stock - which will only increase supply and lower the stock price if there is no business foundation for it. It's only a question of how long it would take.