As predicted last week by analysts, today Sony reported its first consecutive quarterly loss for the first time in four years. For the quarter ending June 30, 2005, the planet's number two electronics manufacturer lost 7.3 billion yen ($65 million).

The majority of these losses stemmed from Sony Computer Entertainment, the company's game division. "An operating loss of ¥5.9 billion ($54 million) was recorded, an increase of ¥3.0 billion compared with the same quarter of the previous fiscal year," said the company in its report.

What was to blame? Sony was vague, saying it was "mainly due to an increase in selling, general and administrative expenses mainly reflecting advertising and marketing expenses incurred during the current quarter." However, the company also did say a major cost was "aggressive research and development spending associated with future business," which almost certainly means the PlayStation 3, which is slated to launch in "Spring" 2006.

The R&D costs must have been steep indeed, since, in the second quarter, Sony's game sales skyrocketed 64 percent, compared with the same quarter in 2004. Although sales of the new slimline PlayStation 2 slumped in Japan, they were way up in the US and Europe. Overall, Sony shipped 3.53 million units, up 2.82 million units from the previous year. However, this didn't translate into commensurate sales of software for the console, as the still-robust 35 million games Sony shipped internationally during the quarter was 3 million fewer than a year ago.

The PSP was another success story for Sony. The company shipped 2.09 million units of the flashy handheld in North America and Japan (it isn't currently available in Europe). However, the PSP's limited software library made the software-to-hardware ratio far lower than that for the PS2, with only 4.9 million PSP games sold, which is little more than 2.3 games for every portable.