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Sony’s Q2 Profit Hit By Battery, PS3 Problems

10/26/2006 09:56:00 AM Eastern

Tokyo — Sony’s profit plunged 94 percent due to its worldwide battery recall and delays with its PlayStation 3 video game system during its fiscal second quarter which ended Sept. 30.

Net income for the company slumped to $14 million based on the $429 million in costs related to the global recall of 9.6 million Sony laptop PC batteries.

The battery recall hurt an 8.3 percent increase in sales for the quarter to $15.6 billion worldwide.

Sony also reported an operating loss in its gaming division of $369 million because of charges related to the preparation for the next-generation PlayStation 3 console, set to go on sale in November in the U.S. and Japan, but not in Europe until next March. Sales and operating revenue for the game division were down 20.5 percent vs. last year’s quarter to $1.44 billion.

The company kept its estimate the same for shipments of PS3 hardware, at 6 million for its fiscal year that ends March 31, 2007. Sony said in its statement that R&D costs have cut profitability for the game unit.

In the core electronics segment, Sony's operating profit for the three months ended Sept. 30, shrank 71 percent to $68 million for the same time last year, while sales and operating revenue increased 12.1 percent to $11.7 billion.

Sony cited increased sales of its BRAVIA LCD TVs, Vaio PCs and Cyber-shot digital cameras worldwide as the main factors in driving its electronics sales upward.

For television during the quarter sales were up 46.7 percent worldwide for Sony to $2.13 billion. Video was up 14.3 percent to $2.4 billion, while audio sales were down in the quarter vs. last year by 6.1 percent to $1.03 billion.

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