| Sony today announced its earnings for the second quarter ended September 30. While overall net income soared to 73.7 billion yen ($645 million), up from 1.7 billion yen a year earlier, the PlayStation business itself still failed to make a profit. Operating loss at the game division more than double from 43.5 billion yen to 96.7 billion yen ($841 million). Sales, however, climbed almost 43 percent to 243.4 billion yen ($2.12 billion).
Sony said the loss in the game division was primarily due to "strategic pricing of PS3 at points lower than its production cost and the increase in PS3-related inventory write-downs recorded during the current quarter compared to the same quarter of the previous year."
Sony sold 1.31 million units worldwide of PS3 during the quarter along with 10.3 million units of PS3 software. Overall hardware sales across the PlayStation business were up primarily because of the PS3, while the PS2 saw a small decrease. Overall software sales decreased thanks to a decrease in PS2 and PSP software sales.
Analysts still don't seem very optimistic about PS3. "There are still no bright signs for the game business," Seiichiro Iwamoto, a fund manager at Mizuho Asset Management in Tokyo told Bloomberg. "PS3's price is still too high to help Sony regain market share."
"PlayStation 3 is fighting an uphill battle," added Masahiro Ono, an analyst with Morgan Stanley Japan Securities. "The $100 price cut isn't likely to change this, because there isn't enough PS3 game software available yet."
by James Brightman
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