PS3, PSP problems force Sony to slash profit forecasts

38 per cent fall due to Japanese price drop and poor PSP sales

The PlayStation 3 price reduction in Japan and a delay to the hardware launch in Europe have forced Sony Corp to reduce its income forecasts for 2007, along with poor performance of the PSP handheld and the continuing problems encountered from a worldwide recall of notebook batteries.

For the year ending March 2007, Sony expects a 38 per cent drop in net income, adjusting the previous forecast from 130 billion yen (EUR 872 million) to 80 billion yen (EUR 573 million). Operating income has been reduced from 130 billion yen to 50 billion (EUR 336 million).

"A decrease in sales and an increase in operating loss are expected within the Game segment as a result of the reduction of the retail price of PlayStation 3 hardware in Japan and the fact that sales and profitability from the PSP business are expected to be lower than originally forecast," said the company in an official statement.

Sony also admitted a "decreased operating income is anticipated within the Electronics segment due to a production adjustment of devices for use in PS3, including semiconductors."

"With regard to PS3, although we expect to record a loss for the business during its initial launch phase within the current fiscal year, we look forward to the successful worldwide deployment and expansion of the platform," said the manufacturer.

"As a result, we expect that we can realise a significant improvement in profitability during the fiscal year ending March 31st, 2008."

Sony announced at last months' Tokyo Game Show that the price of the Japanese PlayStation 3 was to be reduced from 62,790 yen (EUR 421) to 49,980 yen (EUR 335) for the 20GB unit.