Sony needs a recharge

Vidgame, battery problems cause forecast change

Sony has slashed its profit forecasts amid problems in its vidgame division, along with a costly battery recall.

For the fiscal year ending in March, Japanese electronics and content giant cut its expected operating profit by 62% to $424 million from a July projection of ¥130 billion ($1.1 billion). Expected net profit dropped 38% to $678 million from $1.1 billion.  

Sony’s next gen vidgame console PlayStation 3 has been plagued by delays. Originally skedded to ship in the spring, it was pushed back to November; the European launch was then pushed back again to March. In addition, Sony cut back the number of units expected to ship by Dec. 31 from 4 million to 2 million.

Conglom noted in its earnings revision that the delays are not only hurting vidgame unit Sony Computer Entertainment but also Sony Electronics, which is making components for the PS3.

Company is also having problems with handheld device the PlayStation Portable (PSP). Launched last year, the PSP is getting trounced in the market by Nintendo’s DS; weak sales have led Sony to slash its shipment target for the end of the fiscal year by 25% to 9 million units. Nintendo has already shipped more then 20 million DS units.

Sony now estimates that its game division will go $1.7 billion into the red for the fiscal year, nearly double an earlier projection.

Meanwhile, conglom is recalling 8 million batteries from laptops made by Dell, Apple, Lenovo and its own Sony Vaio line. That will put a hit on its bottom line of $432 million.

Overall, however, Sony is holding to its original sales estimate of $69.7 billion in total revenue for fiscal 2006, citing strong demand for its core electronics products, including digital cameras and Bravia digital TVs.

Shares in Sony closed down 1% on the New York Stock Exchange at $39.68.

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