PS3 Does "Massive Damage" To Sony's Bottomline

[Queasy]

Link (sorry...couldn't resist the "massive damage" line in the title)

Sony has warned that the cost of introducing PlayStation 3 this year will flatten profits for the company to their lowest level in five years.
In a statement today, Sony said losses from its PS3 operation will be higher than expected, partly due to the price-cut in Japan, and partly due to shortages and the European delay. The firm has also cut forecasts for PSP shipments by 3 million to 9 million.

Net income for the year ending March 31, 2007 will drop 35 percent from last year to 80 billion yen ($675 million). That?s a 50 billion yen drop from July?s forecast, since which the firm was hit by laptop recalls due to faulty batteries and various PS3 problems. Sony reported a second-quarter operating loss of 21 billion yen, compared with a 66 billion profit a year ago.

Analysts say Sony is a long way away from completing the turnaround instigated by boss Howard Stringer.

I previously read that it was going to be something like 5 years before Sony started turning a profit on the PS3. This was before the delay in shipments and shortage. I wonder what that number is now?

edit: More info

Sony on Thursday cut its profit outlook by 62 percent because of battery recall costs and a larger loss at its game unit, missing market expectations by a wide mark and putting its nascent recovery in doubt.

The revision follows a series of setbacks for the electronics giant, including recalls of about 8 million Sony-made PC batteries by major computer makers and a delay in the European launch of its upcoming video game console, PlayStation 3.

Sony said it will set aside 51 billion yen ($429.1 million) for costs related to the battery recalls, which it would book in the second quarter ended September.

Sony cut its operating profit target for the year to March to 50 billion yen from its July estimate of 130 billion yen. That compares with a consensus of a 160.9 billion yen in a poll of 20 analysts by Reuters Estimates.

"The size of the downward revision is bigger than expected," said Masahiko Ishino, an analyst at Mitsubishi UFJ Securities. "The battery recall costs were within expectations, but the revision highlights the troubles of its game unit."

Slow sales and a discount
Sony expects losses at its game unit to nearly double from its initial estimate to 200 billion yen for the year to March after it cut the price of a model of the PS3 with a 20GB hard disk drive by 20 percent in Japan to spur demand.

Sony's game unit was also hit by slower-than-expected sales of PlayStation Portable (PSP) handheld players.

The company lowered its PSP shipment target for the year ending March 31 by 25 percent to 9 million units.

In contrast, rival game maker Nintendo earlier this month raised the sales target of its DS portable machines to 20 million units from 17 million for the current business year.

Sony shares in Frankfurt traded at 31.01 euros, which translates to about 4,623 yen, down 3.5 percent from Tokyo's close of 4,790 yen. The announcement came after the Tokyo close.

The deep profit revision comes as a setback for Ryoji Chubachi and Howard Stringer, who have experienced mostly success since becoming president and chief executive of the world's second-largest consumer electronics maker in June 2005.

 

[lyssword]

Attack its weak point for MASSIVE DAMAGE!

 

[eelw]

RRIIDDDDDGGEE RRAACCCCCCCCCEERR!!!!!!!!

 

[loup garou]

The company lowered its PSP shipment target for the year ending March 31 by 25 percent to 9 million units.

In contrast, rival game maker Nintendo earlier this month raised the sales target of its DS portable machines to 20 million units from 17 million for the current business year.

Now THAT is massive damage! :laugh:

 

[Stuxnet]

Sony Does "Massive Damage" To Sony's Bottomline

Fixed

 

[acemcmac]

Awesome

 

[z0mb13]

and this is before lawsuits tied to the battery explosions

 

[Howard]

Originally posted by: acemcmac
Awesome

 

[dr150]

This is not good for my Asia Big 50 mutual fund.

 

[T9D]

Sweeett..... /cartman

 

[Specop 007]

Its like the A380 of consoles!

 

[mugs]

Originally posted by: Specop 007
Its like the A380 of consoles!

I think you have an unhealthy obsession with the A380 (and France)