Wednesday, May 16, 2007

PlayStation 3 puts Sony in the red (Variety)

Company posts $573 million loss
By Steven Zeitchik

Sony lost more than half a billion dollars in the fourth quarter, but it was the pesky PlayStation 3 -- not the entertainment division -- that was responsible for the red ink.
Company posted a loss of 67.6 billion yen ($573 million), about 1% more than loss in comparable quarter last year, even as sales in the frame were up 13% to $16.8 billion.

Much of the loss was connected to the vidgame biz, which Sony continues to operate at a loss because of high production costs and intense competition from Nintendo's Wii.

Conglom announced Wednesday that it missed its PS3 sales targets for the year; the company shipped about 5.5 million units, roughly 500,000 short of its previous projections.

But studio was a revenue driver for the group; homevid titles like "The Da Vinci Code" and "Casino Royale" helped send profit at the division up 56% and sales up more than 30%.

Division also is expected to book solid revenue numbers in the current quarter thanks to the eye-popping success of "Spider Man 3," with b.o. having a far more meaningful impact on the bottom line than individual movies traditionally have on a company of Sony's size.

Through last weekend, sequel has earned $622 million worldwide, according to studio estimates.

At the electronics division, sales rose by the high single-digits in Europe and the U.S.

Despite the PS3 woes, Sony had a blockbuster prediction for profit this year, saying that profit would more than double to $2.7 billion for fiscal 2008, which ends in March.

Wall Street took the projections as a sign that Sony CEO Howard Stringer was turning around the company's fortunes and sent up the stock 6% in midday trading. Stringer has embarked on a policy of aggressive cost-cutting to turn around the Japanese giant.

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