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Sony Incurs Loss from PS3

16 May, 2007 By: Jessica Wolf

Sony is upside-down on the PS3 — taking a loss on the price of the platform and shipping 500,000 fewer than the expected 6 million units during Sony's fiscal year, which ended March 31.

Sony Corporation took a nearly $2 billion (U.S.) loss in the game segment for the company's fiscal year compared to around $72 million (U.S.) in net income for the games segment in the prior fiscal year.

The loss is mostly attributable to “the sale of the PS3 at strategic price points lower that its production cost during the introductory period, as well as the recording of other charges in association with preparation for the launch of the PS3 platform,” according to Sony's earnings report released today.

For the fiscal year, Sony shipped 5.5 million PS3 hardware units and 13.2 million units of software for the new platform. Originally, the company said it would ship 6 million units of the PS3 in its launch year.

Sony does expect the PS3 to perform better over the next fiscal year, thanks to a sales increase from the full-scale expansion of the platform into the Japanese market, according to the company's earnings report. Sony also expects a “significant reduction in the operation loss due to rapid reductions in hardware production costs and an enhanced lineup of software titles” for the PS3.

Decreases in software sales for the PS2 also added to the game-segment decline, while PSP income increased a bit thanks to drops in hardware production costs.

PS2 hardware shipments were down 2.2 million units to 14.2 million. PS2 software units shipped in the time frame clocked in at 193 million units, a 30-million unit decrease year-over-year.

The company saw a decrease of 5.7 million units in PSP player shipments to 8.36 million for the fiscal year. But PSP game software shipments were up by 12.5 million units to reach 54.1 million units shipped.

The company's pictures division, which includes Sony Pictures and Sony Pictures Home Entertainment, fared better. Operating income for the fiscal year from this segment nearly tripled, with $362 million (U.S.), compared to around $126 million in the prior fiscal year.

Sales increased 29.5% year-over-year thanks to strong theatrical and home entertainment revenue from The Da Vinci Code, Casino Royale, Click, Talladega Nights: The Ballad of Ricky Bobby and The Pursuit of Happyness, according to the company.

Sales of the BRAVIA LCD HDTV line and Sony VAIO PCs added to a 16.9% increase in sales in the electronics segment for the company's fiscal year.

Overall, Sony Corp. reported a 2.2% year-over-year increase in net income to ¥126.3 billion (about $1 billion U.S.).

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