Sony Game Segment Posts Loss Despite Improving PS3 Business

An improving PS3 business couldn't offset annual losses of $612 million in Sony's game segment, driven down by a strong yen and decreasing PS2 sales, the company said today; PS3, PSP forecasts within.
Sony posted lower sales and an operating loss in its game segment for the fiscal year 2008 ended March 31 on a strong yen and a decrease in PlayStation 2 sales, the company said Thursday. But the operating loss in the segment is less than half of the losses a year ago, thanks primarily to PS3 hardware cost reductions and higher sales of PS3 software, Sony said. Sales in the game segment were ¥1.05 trillion ($11 billion), down 18 percent from the prior year. Operating loss narrowed to ¥58.5 billion ($612.5 million), a decrease from a loss of ¥ 124.5 billion. During the fiscal year, Sony said it sold 10.06 million PS3s, a 10 percent year-on-year increase from 9.12 million. PSP was up 2 percent to 14.11 million, while PS2 declined 42 percent to 7.91 million. In the fiscal year ahead, Sony expects to sell 13 million PS3s, 15 million PSPs and just 5 million PS2s. Software unit sales for PS3 were up 79 percent during the year to 103.7 million units, while PSP software sales were down 9 percent to 50.3 million. PS2 software unit sales were down 46 percent to 83.5 million. Sony expects total software unit sales across all three of its platforms to increase slightly to 240 million from 237.5 million. Sony said it expects sales in the game segment to continue to decline due to the negative impact from the appreciation of the yen and the flagging PS2 business. The company also projected further losses for the game segment “despite our expectation that the profitability of the PS3 business will improve due to hardware cost reductions and an enhanced lineup of software titles.” Across all businesses, Sony reported a 12.9 percent decrease in annual sales to ¥7.73 trillion ($80.9 billion) and an operating loss of ¥227.8 billion ($2.4 billion). Net loss was ¥98.9 billion ($1.04 billion). Sony attributed lower sales and continued loss to the appreciation of the yen, global economic slowdown and a weakened Japanese stock market. In the year ahead, Sony expects sales to drop 6 percent to ¥7.3 trillion ($76.4 billion), and operating loss to further narrow to ¥110 billion ($1.15 billion), as the company conducts further cost-cutting initiatives.

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