PS3 hits 14.4M as Sony game income rises

Despite a doubling of PS3 revs, Japanese giant sees flat quarterly revenues and sinking profits due to lackluster electronic sales.

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A burden on the Japanese electronics giant following the PlayStation 3's 2006 launch, Sony Computer Entertainment has steadily risen, attaining profitability during the third of its 2007 fiscal year. Though the division's annual revenue was still in the red for the year, its losses halved from the prior year, thanks to lowered production costs, increased PS3 and PSP sales, and still-strong PlayStation 2 and software sales.

For the first fiscal quarter ended June 30, Sony's games division reaped ¥229.6 billion ($2.1 billion), a 17 percent increase over the ¥196.6 billion ($1.8 billion) the business brought in over the same period last year. PlayStation 3 and PlayStation Portable sales drove growth for SCE, and the publisher noted that the stalwart PlayStation 2 continues to show signs of age, seeing a slip in year-over-year sales. Despite the slip, the publisher noted that PS2 software and hardware sales continue to contribute to the games division's operating income, which stood at ¥5.4 billion ($50 million) on the quarter, up from a loss of ¥29.2 billion ($270 million) a year ago.

Global quarterly sales for the PlayStation 3 hit 1.56 million, a 123 percent increase over a year prior and 260,000 units more than the 1.3 million Xbox 360s Microsoft sold during the same period. Sony has now sold more than 14.4 million PS3s globally since its November 2006 launch. In comparison, Microsoft has sold over 20 million Xbox 360s internationally since its November 2005 launch as of last week. Nintendo, which will release its quarterly financials tomorrow, reported 24.4 million Wiis were sold worldwide from November 2006 to the end of March 2008.

While not quite as dramatic as the PS3's gains, PSP sales rose 75 percent to 3.72 million units for the quarter. PS2 sales slid 43 percent, down to 1.51 million units for the three-month period.

But while SCE soared, Sony Corp's overall revenues were grounded. For the quarter, Sony saw revenues of ¥1.98 trillon ($18.3 billion), a marginal .1 percent gain over the ¥1.97 trillon ($18.2 billion) posted over the same period of time a year ago. Underlining that stalled momentum, Sony said that net income was down a staggering 47.4 percent over a year prior, falling from ¥66.3 billion ($613 million) to ¥34.9 billion ($323 million).

Sony divisions suffering most significantly were its film and electronics segments. Facing a tough comparison against last year's megablockbuster Spider-Man 3, Sony noted that the Adam Sandler-led You Don't Mess With the Zohan was the biggest contributor to the division's ¥159.6 billion ($1.5 billion). That tally represents a 31 percent year-over-year decrease in sales, and as financial news service Bloomberg notes, the ¥8.3 billion ($76.7 million) loss is the division's first in seven quarters.

Sony's electronics business fell on equally hard times. While the division saw revenues grow a diminutive .7 percent to ¥1.4 trillon ($12.9 billion), operating income was way down, falling 57 percent to ¥44 billion ($406 million). Sony attributed the yen's growing strength against the dollar as a primary cause for the tumble, also noting increased price competition and a decrease in equity for its Sony Ericsson mobile division. These causes offset gains made by the company's flagship Bravia LCD televisions, which saw increased sales and profitability in all regions, the company said.

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