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Sony game unit's Q2 losses double

Though company is back in black overall, SCEI posts $841 million operating loss thanks to aggressive PS3 hardware pricing, declining PS2 sales.


It was the best of times and the worst of times for Sony during its second fiscal quarter. The three months ending September 30 saw the electronics giant back in the black with an operating profit of ¥90.5 billion ($787 million), up from a ¥20.8 billion ($180 million) operating loss the year before and over analysts' expectations. Overall Q2 revenue increased from ¥1.85 trillion ($1.6 billion) to ¥2.08 trillion ($1.8 billion), courtesy of surging sales of Bravia HDTVs, VAIO PCs, and digital cameras. Profits were also up slightly at Sony Pictures Entertainment, the company's film and television division.

The story was much different over at Sony Computer Entertainment Inc., even though its revenue increased 42.9 percent to ¥243.4 ($2.1 billion). The company's game unit saw operating losses more than double, going from ¥43.5 billion ($378 million) to ¥96.7 billion ($841 million). In Sony's own words, the shortfall was "due to the loss arising from the strategic pricing of [the PlayStation 3] at points lower than its production costs and PS3-related inventory write-downs." As of September 30, Sony's worldwide game inventory had increased 31.7 percent to 247.8 billion ($2.15 billion) "due to the buildup of finished goods following the introduction of the PS3 platform."

As for hardware sales, the three months ending September 30 saw Sony sell--not ship--1.31 million PS3s worldwide. The company also sold 3.28 million PlayStation 2s (a decrease of 0.31 million from Q2 2006) and 2.58 million PlayStation Portables (an increase of 0.56 million). The company did not break down said sales by region.

When it came to software, Sony sold 10.3 million PS3 games internationally during its second quarter. PS2 games decreased by 9.2 million units to 38 million, and PSP games dipped 600,000 units to 12.6 million units worldwide. No specific games were called out as being best-sellers.

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