Sony sees its biggest quarterly loss in four years

Sony saw its quarterly losses grow for the fourth fiscal quarter (January 2007 to March 2007). Not surprisingly, the company cited that its overall $563 million USD loss – the company’s biggest quarterly loss in four years -- can be directly attributed to costs associated with the PlayStation 3 console. The company’s Games division witnessed a $1.9 billion USD loss.

"In the Game segment, there was a significant operating loss as a result of the sale of PS3 at strategic price points lower than its production cost during the introductory period," said the company.

The PS3 comes packed with plenty of technology including the complex Cell processor, Blu-ray drive, integrated 60GB HDD, WiFi and Bluetooth. In mid-November, iSuppli estimated that Sony was losing $240 USD on each 60GB PS3 it sold and $300 USD on each 20GB PS3 that it sold. Sony was able to stem those losses somewhat by dropping the 20GB PS3 from its product mix in North America.

Sony expects that it will continue to lose money on the PS3 for the current fiscal year. That being said, the company expects to ship 11 million PS3s for the current fiscal year -- up from 5.5 million units for the previous fiscal year. "The PS3 business will really get off the ground this fiscal year," said Sony Corporate Executive Officer Nobuyuki Oneda.

Sony isn't the only company seeing losses from its gaming division. Microsoft's Entertainment and Devices Division (EDD) which encompasses the Zune and Xbox 360 witnessed an operating loss of $315 million USD for its fiscal third quarter. Microsoft's Robbie Bach notes that the Xbox 360 hardware itself may never end up being profitable for the company, but it plans to make money on peripherals, royalties from game publishers and its Xbox Live online service.

"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation

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