Sony (SNE) Earnings Undermined By PS3

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According to The Wall Street Journal:  "Sony posted a group net profit of ¥73.7 billion ($645 million) in its fiscal second quarter, compared with ¥1.7 billion a year earlier."

The company’s game division posted a deeper operating loss of ¥96.7 billion for the quarter, compared with a ¥43.5 billion operating loss in the year-earlier period, even though the PlayStation 3 game console sold 1.31 million units. The deterioration was caused by lower prices on PS3 consoles and a write-down of inventories.

The news shows just how brutal the situation is for the PS3. Despite price drops, it is still being outsold by the Nintendo Wii and Microsoft (MSFT) Xbox 360. The new Xbox "Halo 3" game should improve sales into Christmas.

But, the holidays are going to be difficult for Sony.

Douglas A. McIntyre

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