Sony's 07/08 Profit Will Quintuple, Games Division Losses Down

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Last year, Sony's operating losses in the games division were sky-high due to the amount of money they poured into the PlayStation 3. However, one year later, they've successfully managed to shrink those losses by a huge amount, and despite missing their company forecast by 30 billion yen, Nikkei and Reuters are reporting that overall operating profit for the 07/08 year should leap "more than fivefold to 380 billion yen ($3.6 billion)."

Now, 380 billion ain't bad, but that's still below the consensus estimate of 393.6 billion yen posted by 17 analysts by Reuters Estimates. Even so, to gamers, it's the games division that interests us the most, and Sony appears to be heading in the right direction. Operating losses in our favorite division shrank by about 100 billion yen in the year ending March 2008, which will certainly help to ramp up the company's profitability. In March 2007, the staggering 232 billion yen loss in the games division was cause for concern, but due to lower manufacturing costs and better system sales worldwide, the early negative effects of PS3 production are starting to dry up. They may have fallen short in comparison to analyst expectations, but those expectations were quite high to begin with.

Lastly, Sony shares were up 3.1% to 4,930 yen as of midday yesterday, which easily outstripped the Nikkei's stock average of +1.8%. There's still a long way to go before all losses fall away in the games division, but Sony has said it before and will probably say it again: "it's a marathon, not a sprint."

5/2/2008 Ben Dutka

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