Sony Slashes Profit Forecasts
10.20.06 - 2:07 AM

The Sony Group today slashed its financial forecast for the current fiscal year ending on March 31st 2007. Compared to the previous forecast released in July, sales remain unchanged at 8230 billion yen ($69.31 billion USD). That being said, Sony now projects a net profit of only 80 billion yen ($673.72 million USD), compared to previously anticipated 130 billion yen ($1.10 billion USD). The company cited two reasons for today's forecast adjustment. First are costs of 51 billion yen ($431.76 million USD) related to the replacement of 9.6 million notebook batteries.

Second are mounting costs at Sony's game division, Sony Computer Entertainment. The price cut and altered specifications of PlayStation 3's 20 GB model, which Sony Computer Entertainment president Ken Kutaragi announced at last month's Tokyo Game Show, together with production problems of blue laser diodes are projected to result in an operating loss of 200 billion yen ($1.69 billion USD), instead of previously projected 100 billion yen ($846.54 million USD). Looking ahead, Chief Financial Officer Nobuyuki Oneda would not comment on whether Sony Computer Entertainment will be writing black numbers again during the fiscal year 2007/2008. Higher production capabilities and shipments of PlayStation 3 during the calendar year 2007 however would allow the world's leading console maker to cut costs, according to Oneda.

Furthermore, Sony Computer Entertainment also had to cut its annual PlayStation Portable shipment target from 12 million to nine million units. While Oneda mentioned that Sony Computer Entertainment was looking at ways to counter declining sales of its first handheld gaming device, the executive acknowledged the only way for the system to become more successful was the development of games and accessories that increase the system's fun factor.

Chris Winkler

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