Sony changes forecast on PS3 woes

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TOKYO -- Sony has been forced to rewrite its profit forecast for the year as a result of a series of high-profile corporate crises, most notably the delay of the PlayStation 3 console and a growing problem involving batteries for laptop computers.

The company announced in a hastily convened press conference in Tokyo on Thursday that it anticipates a profit of 80 billion yen ($674 million) this year, down 38% from its earlier forecast and well below its fiscal 2005 profit of ?124 billion.

Company officials said the battery recall -- which affects some 8 million PC power packs -- will cost it an estimated 51 billion yen ($432 million), and makes the difference between an improvement on last year's earnings and poorer figures.

And even that figure may get worse, the officials admitted.

"This is our best estimate right now," Nobuyuki Oneda, Sony's chief financial officer, told reporters in Tokyo. "It could go up. It could go down."

The PS3 has been bedeviled by problems that have caused its release to be pushed back, with tweaks to the required components likely to set the corporation back some 33 billion yen  ($280 million). That figure will be further hit by a reduction on the price of the console in Japan -- a good PR move, but one that will hit the world's second-largest consumer electronics firm in the pocket.

The poor figures put a dent in the promises by CEO Howard Stringer to rebuild the company's image after the losses in 2003.

The battery recall fiasco has affected computers made by Toshiba Corp., Dell Inc., Apple Computer Inc., IBM Corp., Lenovo Group Ltd., Fujitsu Ltd, Hitachi Ltd. and Sharp Corp., and the news that Toshiba is considering legal action for compensation will have further damaged confidence in the company.

Sony has claimed that the fault lies with shards of metal that contaminated the battery packs during the manufacturing process, although some have suggested that the problem is more fundamental than that and involves the basic design of the packs and the power cell.
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