Report: PS3 to Lead Sony Profits
Sony and its game division have had a rough year, but in the new fiscal year the PS3 and the game division are expected to make a big recovery, according to a consensus forecast of analysts. The PS3 is expected to help drive profits up fivefold for Sony.
Sure, right now the PlayStation 3 is responsible for huge losses at Sony. In fact, for the fiscal year ended March 31, Sony's game division is expected to post a whopping loss in the area of 200 billion yen. Neither Sony nor analysts expect losses to keep piling up, however. As Sony would remind us, the PS3 is seen as an investment. In the long-term, the company believes it will reap big gains.
According to a report in the Nikkei business daily (as reported by Reuters), Sony expects to see its operating profit surge in this new 2007/08 business year. Operating profit is forecast to grow fivefold to 400 billion yen ($3.36 billion)a sharp increase over the 60 billion yen for 06/07thanks to increasing sales of its LCD TVs (particularly in the U.S. and Europe) and a recovery at its game division. Overall group sales are expected to rise 6 percent to 8.7 trillion yen for the fiscal year ending next March.
It's been a slow ramp up for the PS3 thus far, but Sony's game division is expected to really move into high gear as it boosts PS3 shipments 67 percent to about 10 million units during 07/08. The company will also be able to streamline manufacturing as it benefits from better semiconductor production yields and cost-cutting efforts.
Last month, IBM already started producing 65-nanometer Cell chipsMicrosoft has yet to shift from its 90-nanometer chipsand another move from 65-nm to 45-nm could take place within the next 1-2 years. It should also be noted that in Europe Sony has already removed the Emotion Engine PS2 chipset from the PS3s, and that's something that is likely to take place in other parts of the world as well, further reducing costs for the game division.
[UPDATE] According to Bloomberg.com, Sony has denied the 10 million shipment forecast for the PS3. "The Nikkei numbers are just estimates and we can't comment on it," said spokeswoman Mami Imada.
Meanwhile, Sony's full earnings report for fiscal 2006 is expected to be released on May 16. It's possible that the company will make official projections for the PS3 at that time