Earnings: Sony’s Profit Falls Due To PS3 Costs

The cost of launching its Playstation 3 video game console caused Sony (NYSE: NSE) to report a 5 percent drop in profits for 3Q FY 2006, even as its sales of flat screen TVs, digital cameras another electronics saw strong sales during the holiday shopping season. In particular, however, it was Sony's game division that held back earnings. Sony Computer Entertainment, the gaming unit, posted a $443 million operating loss for the quarter ending Dec. 31, mostly attributed to startup costs for the PS3, according to a company release. Other highlights from Sony's presentation:
-- Net profit fell to 159.9 billion yen ($1.3 billion) from 168.9 billion yen the same period a year earlier, representing a 5.3 percent decrease, the company said in a statement.
-- Quarterly sales jumped 9.8 percent to $21.4 billion.
-- The electronics unit reported record sales for the quarter and an operating profit of $1.5 million, double from a year ago.
-- Sony experienced a $276 million gain from its investment in London-based Sony Ericsson.
-- Sales were up 47 percent at Sony's movie division, where it returned into the black from losses the same period a year earlier, on healthy DVD sales.
-- The company raised its profit forecast for the full fiscal year through March to $903 million, from the previous $657 million. Its fiscal 2006 sales target remained unchanged at $67.6 billion.
The Tokyo-based company said it shipped 1.84 million PS3 machines worldwide during the quarter. The machine has already gone on sale in the U.S., Japan and some other countries, but its sale has been delayed to later this year in Europe. The Earnings release is available here as a PDF