Sony 3rd-Quarter Profit May Fall 50%

According to Bloomberg, Sony 3rd-Quarter Profit May Fall 50%

I'll just cite some of the interesting parts.

Sony Corp., the world's largest maker of video-game players, may report third-quarter profit fell 50 percent after its flagship PlayStation 3 lost market share to Nintendo Co.'s Wii.

Losses from games probably drove net income down to 84.1 billion yen ($691 million) in the three months ended Dec. 31, from a record 168.9 billion yen a year earlier, according to the median estimate of five analysts surveyed by Bloomberg. Sales at Tokyo-based Sony, which reports earnings tomorrow, probably rose 9.6 percent to 3 trillion yen.

The results may highlight Chief Executive Officer Howard Stringer's failure to fend off Nintendo, whose $250 Wii console outsells the PlayStation 3 by two-to-one. Sony may still exceed its full-year profit target because of a weaker yen, sales of Bravia televisions and growth at its movie unit.

``A drop in third-quarter results is largely expected on the games division. There's no surprise unless the company further reduces its profit forecasts,'' said Mitsushige Akino, who oversees $468 million in assets at Ichiyoshi Investment Management Co. in Tokyo. Akino doesn't recommend investors buy Sony stock ``until the company improves its earnings.''

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The game division, Sony's second-largest by revenue, probably lost 50.9 billion yen during the quarter, compared with a profit of 67.8 billion yen a year earlier, after sales fell 7 percent, according to the Bloomberg survey.

After botching the PS3's debut with production delays and cutting the price to compete against cheaper Wii and Xbox players, Sony will probably lose a record 191.9 billion yen from games this fiscal year, compared with profit of 8.7 billion yen the previous year, according to the Bloomberg survey.

Nintendo, the world's largest handheld game maker, last week reported profit in its latest quarter jumped 40 percent to 77.6 billion yen, fueled by demand for Wii consoles and portable DS game players.

In the U.S., Nintendo sold 1.1 million consoles in November and December, almost double the PlayStation 3 units shipped during the period, according to researcher NPD Group. In Japan, Nintendo sold 989,118 Wii units last year, more than double PlayStation 3 sales, according to researcher Enterbrain Inc.