Despite PS3 losses, Sony profits soar

By Mike Bantick
Friday, 27 July 2007 05:31

Entertainment

Q1 financial results are in for Sony: Whilst the PlayStation 3 hardware losses are a drain, through strong sales in digital cameras and LCD TV’s Sony has had a profit surge.

Sony has reported a ¥66.5 billion yen (US$540 million) profit for the first quarter of the year, up from ¥32.3 billion yen (US$270 million) last fiscal year.

The financial report was upbeat about the gaming division announcing that revenue in that area had increased 60.5% from the same quarter last year.  With an increase of PlayStation 3 consoles being the main reason quoted.

Though sales of PS3 have been strong – especially recently due to the US$100 price cut in the U.S. Sony have admitted that this has increased the game division’s operation loss. Strategic pricing of PS3 at points lower than its production cost – meaning that the cost to build the PS3 is still outweighing the retail return.

Despite the flagship Sony device, the PS3 cutting into profits, the digital camera and LCD TV market continues to surge, with a record operating profit of ¥99.32 billion yen.

"We will have competitive lineup of TVs this fall ... But it seems quite tough to achieve a profit (in the TV business) for the year," said Sony Chief Financial Officer Nobuyuki Oneda.

Microsoft is rumoured to continue Sony’s woes in the game console arena if the price cut to the Xbox 360 eventuates soon.  Some industry observers suggesting that if done right, Microsoft could challenge even the current ‘hot cake’ of the game console world, the Nintendo Wii.

Still the PS3 will build momentum as games, Blu-ray and online content become increasingly available. 

Some of the exclusives coming to the Sony machine in the next year or so (Heavenly Sword, LittleBigPlanet, Lair to name a couple) should give the console the boost it needs.   Possibly, even the redisigned PlayStation Portable could take off.

Meanwhile it looks like Camera’s and TV’s will keep Sony going strong.