Sony Computer Entertainment back in black

Sales of 4.9 million PS3s, 5.76 million PSPs give once-ailing game division record quarterly earnings of over $5 billion; analysts remain skeptical.

Three months after posting an $841 million operating loss for its second fiscal quarter, Sony Computer Entertainment Inc. is back in the black. Today as part of its overall earnings report, Sony reported that its game division posted a profit during its third fiscal quarter, which ended on December 31, 2007. SCEI posted a ¥12.9 billion (around $121 million at today's exchange rate) profit on ¥581 billion ($5.45 billion) in revenue for the three-month period, up from a ¥54.2 billion ($508.9 million) loss on ¥442.8 billion ($4.16 billion) the year before.

SCEI's resurgence was in large part due to the PlayStation 3. Though the console's development and production costs had been draining Sony's coffers since 2006, the company now reports "a significant decrease in the operating losses of the PS3 business as a result of successful PS3 hardware cost reductions."

As a result, Sony made money on many of the 4.9 million PlayStation 3s it sold worldwide during the quarter, an increase of 3.24 million units from the same period the year prior, when the console launched in November. PS3 software was also up, rising 20.7 million units to 26.0 million units.

Unfortunately, the robust figures didn't keep the company from lowering its oft-vaunted 11 million-unit annual PS3 goal to 9.5 million. However, even that new figure wasn't enough for some analysts. "Sony had forecast 11 million units, while we forecasted 8.5 million units," said Pacific Crest Securities' Evan Wilson in a note this morning. "While Sony is confident in its new forecast...we remain skeptical of its target."

Today's report also touted the PlayStation Portable, which saw sales rise 1.05 million units year over year to hit 5.76 million for the quarter. As a result, Sony raised its sales estimate by 30 percent to 13 million for the year. The grass on the software side was not greener, however: The 18.3 million PSP games sold during the quarter were 3 million fewer than were sold than a year ago.

Unsurprisingly, Sony spun its Q3 numbers as the first of many profitable earnings reports. Wilson, though, still thinks the PS3 is not living up to its potential. "Sony appears to be trading the long-term success of the PS3 for a near-term profit," he said. "It is possible that it could meet its reduced target of 9.5 million PS3 unit shipments as retailers ramp inventory in fiscal Q4 (March) for the anticipated releases of Grand Theft Auto IV (April 29) and Metal Gear Solid 4 (June). However, we continue to believe that the primary barrier for PS3 is price, and until the console reaches a mass-market price point, its sales will struggle." Currently, the 40GB PS3 is $399 in the US, with the reportedly discontinued 80GB model selling for $499.

393 Comments

  • bdbogart

    Posted Jan 31, 2008 12:20 pm PT

    Yikes...Harsh words against sony.

  • ratchet3

    Posted Jan 31, 2008 12:20 pm PT

    Back in Black, we'll wait and see.

  • skirlnik

    Posted Jan 31, 2008 12:22 pm PT

    Love my PS3, don't care how well Sony does financially.

  • lord-of-gamers

    Posted Jan 31, 2008 12:22 pm PT

    back in black - im saying "keep it up sony!"

  • Loucetios

    Posted Jan 31, 2008 12:24 pm PT

    cool

  • KGB32

    Posted Jan 31, 2008 12:26 pm PT

    i agree with Wilson's theory about the price being the barrier, if it could be lowered, or have an even more cut-off version of the PS3 for say, 349.99, they would have a lil more success.

  • exclusiveburner posted Jan 31, 2008 12:28 pm PT (does not meet display criteria. sign in to show)

    exclusiveburner

    Posted Jan 31, 2008 12:28 pm PT (hide)

    How can they be skeptical when they haven't released one A+ Title yet? They're is no game out there currently pushing PS3's sales but 2008 will change as we have a massive amount of games coming. MGS4 alone will sell an additional million units. People arent buying because theres no games worth playing, its that simple. Fiscal first quarter 2009 however when the sales nearly triple they will all be pleased. Sony is a very smart company with a lot of tricks up there sleeve, give them time the ball is rolling stronger now then ever, and games are coming out very soon.

    PS3 will be sold for the next 10 years easily. By then Microsoft will probably go through 2 more consoles and call it quits.

  • BoogieManZero

    Posted Jan 31, 2008 12:31 pm PT

    The PsP has every reason to be a really kick ass portable system, but it is almost like the system was just unlucky. Aren't they cheaper than the ds now? Funny how that works, the system that isn't as powerful is vastly outselling the one that is more powerful...wait a minute...

  • BoobyUnger

    Posted Jan 31, 2008 12:32 pm PT

    like exclusiveburner said how can they be skeptical sony has been in the elctronic biz for a long time im sure they know what they are doing and as exclusive said they dont even have a game pushing it yet

  • CodyTG posted Jan 31, 2008 12:33 pm PT (does not meet display criteria. sign in to show)

    CodyTG

    Posted Jan 31, 2008 12:33 pm PT (hide)

    I could care less about sales, stock, bla bla bla. I have fun playing all 3 of my next-gen consoles, and my beefy PC.

  • Tyfon_Gump

    Posted Jan 31, 2008 12:36 pm PT

    i love my ps3 but they definitely need another price cut maybe even the 40gb down to $300 but what they really need are games that will access the full potential of the ps3's power and they need to improve their software. MS has better software and sony has better hardware and until that hardware is used to make some amazing software they are going to be behind.

  • Yuck_Too

    Posted Jan 31, 2008 12:36 pm PT

    How in the world did they manage to sell 3 Million less games for the PSP?

    ...Actually now that I'm thinking about it I wonder if those we're trade-in fatties for slims.

    And I bet a lot of that money has to do with the PS2, which also out sold the PS3 in both units and titles and that is big money for Sony.

  • vacancy009

    Posted Jan 31, 2008 12:37 pm PT

    The PS3 could be sold for the next 20 years, that still doesn't change the fact that they might put out another console in 4 or 5 years. Let's remember these are gaming machines and in 5 years the standard PS3 hardware won't cut it anymore. They can release something better or lose market share to the next wave of consoles.

  • Shomb22

    Posted Jan 31, 2008 12:38 pm PT

    That doesnt make sense. More PSPs sold but less software. What are people buying?

  • ctg867

    Posted Jan 31, 2008 12:39 pm PT

    Wow, already? That's great news. Their strength in the portable division and their continued success with last gen hardware is what mainly fueled it. The real increase in PS3 sales helped as well, though that's not why they got into the black.

    I know the 360 had some big sales number of something for last year, but did Microsoft even make it into the black yet? I think they did for the quarter, but I think their gaming division is STILL in the red. That's kinda what happens when you have all these broken consoles everywhere....

  • 4esth

    Posted Jan 31, 2008 12:43 pm PT

    "That doesnt make sense. More PSPs sold but less software. What are people buying?"

    Who is to say they ARE buying anything? PSPs remain one of the hottest modded devices out there.

  • K_A_R_X

    Posted Jan 31, 2008 12:53 pm PT

    With so many killing titles on the way, seems like 2008 will be the year of PLAYSTATION3!

  • diablobasher

    Posted Jan 31, 2008 12:53 pm PT

    Bearing in mind that these numbers for PSP games likely wont include second hand or ebay sales, a lot of people despise buying new for handhelds (dont ask me why i've no idea)

    That and the PSP is a modders dream.

  • Rockman_00X posted Jan 31, 2008 12:53 pm PT (does not meet display criteria. sign in to show)

    Rockman_00X

    Posted Jan 31, 2008 12:53 pm PT (hide)

    You guys have to reaize the PSP isn't a "true" gaming hand held. It's more of a portable media player. Most people get it to watch movies/play mp3's. My brother has both a DS and PSP, and he has less than 5 games, no UMD movies, but takes it on the go to watch videos or listen to music. While he has I think 11-13 DS games. Like wise with the PS3. It's more of a home media center, like the 360, than for just playing video games. If you don't believe me, name me any ONE franchise that is exclusively FIRST PARTY made only by Sony or only by MS for it's respective system?


    I rest my case.

  • Jaster_DCX

    Posted Jan 31, 2008 12:53 pm PT

    unlike the DS, there are multiple media functions for the psp. Thats why software prices might go down yet hardware go up.

  • SpareJesus

    Posted Jan 31, 2008 12:54 pm PT

    I'm surprised nobody's started AC/DCing yet..

  • ianpm

    Posted Jan 31, 2008 12:56 pm PT

    Even though they reduced there shipping forcasts for the fiscal year to 9.5. Sony at the moment is at 10.49 million ps3's sold worldwide. Thats pretty good considering that there big hit titles havent even came out yet. 2008 is looking great for Sony

  • sterofuse

    Posted Jan 31, 2008 12:59 pm PT

    Rockman_00X

    Ratchet and clank for the ps3. and utill recently halo for microsoft. oh and forza. check your facts buddy!

  • CamisadoBlue

    Posted Jan 31, 2008 1:03 pm PT

    about damn time, now start putting some of that money into creating exclusive games!!!

  • moatartareque

    Posted Jan 31, 2008 1:03 pm PT

    i hope 2008 will bring light to sony n ps3

  • IBuyGames

    Posted Jan 31, 2008 1:07 pm PT

    2008 is ps3s year to shine.

  • elmetfano

    Posted Jan 31, 2008 1:09 pm PT

    damn looking at the 08 line up DAMN my PS3 is never going off

  • skullkiller3

    Posted Jan 31, 2008 1:09 pm PT

    rockman oox what are you talking about?

  • Volgin13

    Posted Jan 31, 2008 1:12 pm PT

    great news but the only thing that could top that is news on a MGS4 demo

  • buccaneers445

    Posted Jan 31, 2008 1:13 pm PT

    rockman stop smoking weed ur friend is a retard

    psp is as real of a handheld system thts ever been made

  • Canitbe

    Posted Jan 31, 2008 1:16 pm PT

    psp is a decent handheld, unfortunately it's had nothing but **** games released for it.

  • JimmeyBurrows

    Posted Jan 31, 2008 1:17 pm PT

    lol... I like how the American people think that £200 is expensive for a PS3... frankly £400 is a good price for what your getting... well it was for the backwards compatible one... but we Europeans have to shell out £300 minimum... why do we always get ripped off... also Rockman_00X, you fail... the PSP is great... the fact that it does more stuff doesn't make it worse than the ds... if anything it makes it better. now I don't have to carry around a load of junk, or just put up with one thing... now I've got a PSP, a PS1, an MP3/AAC player, a video player and something to get on the net with if your not in a hurry, lol. it's even got internet radio, pointless as it is, if you find a good station it can be amusing... and the games on the PSP rule!
    with Nintendo it's all about 2 minutes of fun, then your bored and need to find something else to do... all in all your wrong.

  • Canitbe

    Posted Jan 31, 2008 1:18 pm PT

    Also, with the new ability of streaming my PC GAMES (using Linux and add on)and playing them on the PS3, I'm currently taking another look at buying a PS3.

  • Udsen

    Posted Jan 31, 2008 1:18 pm PT

    Rockman

    God of War says hello. Not only is it a first party franchise, it`s an AAA franchise.

    Game over.

  • clyde46

    Posted Jan 31, 2008 1:18 pm PT

    err try Gran Turismo.

  • okassar

    Posted Jan 31, 2008 1:19 pm PT

    I own a 360 but that doesn't mean I think the PS3 is bad.I think it's a great package,Blu-ray and gaming in one system for a now reasonable price.But the thing is,I'm one of the people waiting for a real winner in the disc wars,and,when Blu-ray wins,Blu-ray drives will be cheaper so that I will have a Blu-ray player and still stick to the 360,which, I think,gets much better games due to the fact that developing for the 360 is much easier than developing for the PS3 because developing for the PS3 has the obstacle of having to deal with developing on the relatively new Blu-ray disc.Unless they want to spend 4 years on a game,no developer can really get a master game on the PS3.Maybe MGS4 since that was in development for a long time,maybe God of War,but that's not enough from me.PS3 already ruined alot of classics anyway,Dexter is dead now that they tried to develop it for the PS3 on Blu-ray and failed.What's better than a day with Halo 3 and COD4 online and then some Mass Effect and Assassin's Creed on the side?And then maybe some Madden 08 on Xbox Live too.But Sony on the other hand doesn't have good online,that's another issue.Xbox 360=more games,better games,better online.I'm not an MS loyalist.By any means,if,next-gen,Sony makes a better system,hell I'll buy it.But seeing the fact that MS can improve on all grounds much quicker than any other company,then the 3rd system is gonna' be GOLIATH.

  • fluffebunnie

    Posted Jan 31, 2008 1:19 pm PT

    Rockman_00X:

    While I appreciate your ID, you are sadly mistaken on this one. I think the PSP has a really good library now and I would prefer it to poking a DS with a stick and blowing in the microphone any day.

  • pirategunner

    Posted Jan 31, 2008 1:21 pm PT

    PS3 FTW

  • gforce216

    Posted Jan 31, 2008 1:22 pm PT

    Great to see Sony in the black. They're comin back!

  • livinglegend100

    Posted Jan 31, 2008 1:25 pm PT

    I think Sony will hit its target. If it holds truth that MGS4 will come out in march. cause lets face it, that game will sale itself and PS3s.

  • FourtyCal

    Posted Jan 31, 2008 1:25 pm PT

    er...rockman oox sony has the god of war franchise, folklore (for whatever thats worth), heavenly sword, infamous, ratchet & clank, resistance, killzone, and a couple others i probably forgot

  • 4quarters

    Posted Jan 31, 2008 1:26 pm PT

    360 exclusive this year.......Halo Wars, and fable 2...........PS3....Gran Turismo 5, Metal Gear Solid, Little Big Planet, Resistance 2, Infamous, and MANY more. No contest Sony will rule later this year! No one can argue that by end of year Sony library will be better.

  • animemog

    Posted Jan 31, 2008 1:26 pm PT

    Fanboyism.

  • shortyman920

    Posted Jan 31, 2008 1:26 pm PT

    I really want ps3 to do well this year. Sony deserves it after all the crap they've been taking the past year. But with stuff like LBP, Home, MGS4, Resistance 2, FF13, it shouldn't be too hard to close the gap or even overtake 360.

  • BelmontMaster

    Posted Jan 31, 2008 1:26 pm PT

    Sony Hell yeah! We are coming back!

  • X_CAPCOM_X

    Posted Jan 31, 2008 1:27 pm PT

    So much for all of those radical fanboys saying that Sony would go bankrupt.

  • FourtyCal

    Posted Jan 31, 2008 1:27 pm PT

    oh yeah and microsoft has viva pinata...

  • AbrahamPenaloza

    Posted Jan 31, 2008 1:27 pm PT

    Ps3 is good

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