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Sony Profits Double, PS3 Division Losses Down To Hardware Costs
by Leigh Alexander
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July 26, 2007
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Electronics giant Sony has announced Q1 financial results showing that profits have more than doubled, thanks to a depreciating yen against the dollar and Euro, and strong sales of LCD televisions and digital cameras.
However, Sony also said its "strategic pricing" of the PlayStation 3, which is lower than its production cost, is leading to game division losses.
The company reported a ¥66.5 billion yen ($540 million) profit for the quarter, up from ¥32.3 billion yen ($270 million) in the same quarter of the previous fiscal year, adding that sales of semiconductors to the game division assisted the boost. Overall revenue was up 13.3% to ¥1.98 trillion yen ($16.6 billion).
The company commented that revenue in its game division increased 60.5% compared to the same quarter of the previous fiscal year, attributing the increase to sales of Playstation 3 consoles. Its overall increase in sales and operating revenue was 13.3% over the same quarter in the previous fiscal year.
However, Sony also admitted operating losses in the game division, attributed primarily to "strategic pricing of PS3 at points lower than its production cost", a key phrase admitting that the individual parts making up the PlayStation 3 cost the company more than their current combined retail price.
On the heels of its last financial announcement, which yielded Sony's worst quarterly loss in four years, the tech giant opted to leave its ¥320 billion ($2.7 billion) net profit forecast for the March 2008 fiscal year unchanged.
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