Sony’s most recent quarterly earnings highlight what many analysts call the biggest single challenge now facing the recovering Japanese electronics conglomerate: the shaky start of its long-awaited PlayStation 3 game console.

The company blamed a large loss in its games division, despite rebounding sales of its bread-and-butter consumer electronics. The games division posted a quarterly operating loss of ¥54.2 billion, down from a ¥67.8 billion profit a year earlier.

The better results outside of game operations helped Sony beat analysts’ predictions that it would see net profit plunge by half in the most recent quarter. They also helped Sony raise its projected net profit for the current year, which ends March 31, to ¥110 billion, from its October forecast of ¥80 billion.

But before Sony can pull out of its long slump once and for all, it has to fix the problems in its high-profile game division.

I’ve worked for corporations that lopped-off VP’s over a 20% loss in profits from a flagship operation like Sony’s Games.

  1. Mike says:

    Hillarious pic… that’s all I have to say

  2. JT says:

    Sony would like to place all the blame on PS3 sales but their overall quality reputation took a serious hit which will be hard to recover from. They’ve had the lithium battery fiasco; they were behind the rootkit debacle and their CCD image sensor recall on their digital cameras and camcorders. Consumers are becoming increasingly leery about purchasing Sony products. Once your reputation is destroyed, it can take years to earn back, if ever.

  3. Mark Derail says:

    Thanks to intelligent posts on this blog from a few months ago, about HDTV, my new 32″ set is a Samsung, instead of, a Sony.

    My last Sony product, an MP3/5-cd mini-stereo player, has serious hiccups (you hear a relay ticking off & on) even playing just the radio.
    Less than 2 yrs operation in a household use.
    Will be my last Sony product, too.

  4. tallwookie says:

    *in a Pavorotti style voice*

    Dealth to Sooooonnnnnnyyyyyy

  5. Brian says:

    Sony has and continues to shoot itself in the foot over and over and over again.

    -PS3 delays and ridiculous prices with no supply
    -the CD rootkit fiasco
    -losing exclusive games due to no system availability
    -the list goes on

    Sony will try to blame the gaming market, but Nintendo and MS are having no problem moving systems and games. Perhaps it’s time for Sony to look inward to their difficulties.

  6. Geoffrey Platt says:

    Let’s keep this in perspective. The games division lost money (US$450 million) when launching a new console. This is normal. Subsequent years should be profitable (see PS/1, PS/2). Although they may be struggling with the PS/3, they could pull it off.

    Now compare with Microsoft. So far they have lost around US$5 Billion on XBox. The original XBox NEVER made a profit. The XBox360 may be becoming profitable now, but it still has to catch up and repay the billions in accumulated losses, will it ever achieve that?

  7. Angel H. Wong says:

    #8 Has a point.

    IMNHO the PS3 will eventually win the console wars once the games mature and the novelty of the Wii fades out.

  8. Bob Preslar says:

    On the other hand the nintendo wii is estimated to cost around 160$ to manufacture per unit. Sony is suffering from being too big. It’s difficult to concentrate on simply making a good console when you’re also fighting a next gen format war. Besides, it’s becoming common household knowledge that Sony is straight up evil.

  9. ECA says:

    Sony, Evil???
    OK, then what is MS?? Satan HIM SELF??

  10. JoaoPT says:

    Never had Sony such contenders on the Consumer Electronics market like LG or Samsung. And also the Market is a moving target: Late eighties when I started working on a Video production facility we had (almost) wall to wall Sony equipment. And on the consumer front Sony had no VHS VCR, no PC, no CellPhone, no Console. Basically they had splendid TVs and cassete recorders, and average Hi-Fi sets. Then they had CD players… and that was that. Today they have almost every kind of appliance under the Sun (except kitchen utilities), and people already say Sony is dead.
    My guess is that Sony is spreading itself to thin. And also should move out of the Content industry. They should focus on their traditional market and nothing else. They should start with the TV set and then build from there: Media Center, Console, Blu/HD/DVD player, Home media serving, TVboxes, Surround gear, etc… And start thinking on the “sexiness” of solutions…
    Wanna know who is doing that? Apple.
    They are just the TV set and the Console away of achieving this.


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