Sony Profits Surge, But PlayStation 3 Losses Deepen

Electronics giant Sony has announced rebounding profits of 73.7 billion yen ($645 million) for the July-September quarter, thanks to increased sales of TVs, PCs, and cameras, with 1.31 million PlayStation 3s sold, but the game unit's losses widening due to the cost of PS3 hardware. In Sony's game segment (the SCE division), sales did increase 42.9% year-on-year, primarily as a result of the contribution to sales from the PlayStation 3. However, an operating loss of 96.7 billion yen ($841 million) was recorded, significantly larger than the previous year. According to a statement from the company: "This deterioration was primarily due to the loss arising from the strategic pricing of the PS3 at points lower than its production cost and the increase in PS3 inventory-related write-downs... compared to the same quarter of the previous year." In addition, specific hardware and software numbers were given for PS3, PS2, and PSP hardware compared to the previous year. Interestingly, Sony has changed its method of gathering these numbers "from production shipments to recorded sales", as from June 2007, for unspecified reasons possibly related to a surfeit of PS3 hardware in stores. Nonetheless, the numbers given are as follows: PS2 worldwide hardware sales for the quarter at 3.28 million, down 0.13 million year on year; PSP worldwide hardware sales at 2.58 million, down 0.56 million; and PS3 sales at 1.31 million. As for worldwide software sales, the PlayStation 2 saw total sales from all first and third-parties of 38.0 million units, down 9.2 million year-on-year (bearing in mind the difference in collection methods). The PSP had software sales of 12.6 million units, down 0.6 million, and the PlayStation 3 had sales of 10.3 million software units. Elsewhere in the firm, however, electronics segment sales increased over 20% thanks to Bravia LCD television, Vaio PC and Cyber-shot camera sales, though sales declined for products such as LCD rear-projection televisions. However, this electronics segment, rather than Sony Computer Entertainment, was the engine for Sony's profit growth, which surged over the previous year, after Sony laptop battery recalls significantly affected profit in 2006.