The timing for Sony could not be worse for the culmination of nasty events. Negative press is one issue but that can be squelched with positive results. The last few months of problems would give anyone a nasty migraine.
Sony cuts the price of the PlayStation 3 (PS3) in Japan to help battle against some nasty competitors. On the hand-held side they're getting tooled badly by Nintendo and its DS product. Add on this an 8-million unit recall on Sony brand PC batteries and you have yourself a whirlwind of events.
Sony announced today, a cut in its profits by roughly 62 percent because of game unit losses, battery recalls and a host of PS3 delays. The total units, nationwide, have been cut on its next console and delayed outright in Europe. In July, Sony predicted 130 million yen in profit and now considers the number more like 50 million yen. Thats a bit off from prior expectations to say the least.
Expected losses in the game market? Nearly double from the original estimate. The major loss comes with the price reduction of the PS3's low-end model in Japan by roughly 20 percent. Reduction in costs caused some heart burn as did the lack of PSP sales to adjust for this PS3 price duct. Sony's stock dropped 3.5% upon hearing the profit-outlook announcment.
Not unexpectedly, Nintendo raised their sales target on the DS hand-held by an additional three million units this year.
Can it be worse? Of course it can. The Sony branding has been scarred after Dell and Apple Computers finds their batteries catching fire from over heating, in rare cases. Will these major manufacturers look elsewhere for safer batteries? Dell and Apple cannot afford to be branded as selling a "killer laptop" because there is a chance of mortal danger.
These new profit predictions do not reflect any potential legal action that could be taken against them for their battery problems. This problem is still up for debate as Toshiba says they will seek compensation for Sony's battery issue. Like others, Toshiba cannot afford to have its brand marked and potential lost sales due to exploding batteries - no matter how rare the case may be.
Source: zdnet.com
