Sony's games division is expected to post a 50.9 billion yen loss, and analysts believe this will be a key factor behind a drop in the overall third quarter results. The costs associated with the PlayStation 3 are being blamed for the difficulties faced by the game division:
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.
While profits will be down, the analysts believe that sales from Sony's Bravia LCD TV, Vaio computer and Cyber-shot digital camera productlines should still be higher than expected amidst the losses from the game division.
Update 2007-01-30: Sony's Q3 profit did indeed decline as a result of its games division losses, but only by about 5%, far less than what Bloomberg had predicted. As explained earlier, Sony's core electronics business performed much better than expected, allowing the company to beat its own profit estimate for the quarter. The company's game division itself posted a 54.2 billion yen operating loss compared to the 67.8 billion yen profit scored last year.