Sony Expects Vid Game Losses to Continue

"The main point is that the PS3 will still be producing operating losses," Senior Vice President Takao Yuhara told a small group of reporters at Sony Corp.'s Tokyo headquarters.

On Wednesday, Sony reported that losses for the January-March quarter widened from the same period a year ago to 67.6 billion yen (563 million) in red ink, largely on launch costs for the PS3, or PlayStation 3, which went on sale in November in Japan and the U.S., and in March in Europe.

But Sony, which makes Vaio personal computers and Walkman portable music players, forecast a record profit for the fiscal year through March 2008 at 320 billion yen ($2.7 billion).

Booming sales of flat-panel TVs and digital cameras that have been lifting sales are expected to continue and boost Sony's earnings in coming months, Yuhara said.

Although PS3 losses are expected to shrink with cost cuts this fiscal year, the key lies in having Sony and outside game-makers produce attractive games to play, which fully exploit the machine's expensive technology, he said.

"What's most important is software," Yuhara said. "In every region, our software lineup will be strengthened."

Sony's revival efforts, led by Welsh-born American Howard Stringer, Sony's first foreign CEO, may finally be starting to pay off. After taking the helm in 2005, Stringer got Sony to drop unprofitable businesses, sell off assets, reduce jobs and shutter plants. But losses from PS3 remain Sony's biggest headache.

Intense competition with Nintendo Co.'s hit Wii, with its unique wand controller, also has hurt PS3.

Sony shipped 5.5 million PS3 machines in the fiscal year through March 31, fewer than the 6 million the company had targeted. Nintendo shipped 5.84 million Wii machines worldwide during the same period.