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The firm cut its full-year operating profit forecast by almost one-quarter to 100bn yen (£542m; $918m), after reporting net earnings of 32.9bn yen for the the third quarter of this year.
While Sony's results appear respectable in isolation, they come at a time when its rivals - notably Japan's Matsushita and Sharp - are performing particularly strongly.
And investors in Sony are nervous about an impending announcement of an overhaul of its electronics business, which suffered a 6.5% sales drop in the year to end-March.
Fears over Sony - which reported results after the Tokyo markets closed - helped spark a 5% drop in the Nikkei share index.
Bad at games
Sony's electronics business has been a relative underperformer in recent years.
Feeble sales in many products - most notably games hardware - have weighed on Sony's shares, causing the firm to miss out on a surging Nikkei this year.
Sony's Game division, which produces both hardware and software for games, saw its sales fall to 161bn yen in the third quarter, from 250bn yen a year earlier.
Sony blamed the sharp decline on weak Playstation sales, which were dented by a dock workers' strike in the US, and which compared unfavourably with a very strong quarterly performance in the same period of 2002.
Only in Europe are Playstation 2 unit sales still on the rise, Sony said.
Money worries
Sony is the most closely-watched company in Japan, and its performance is seen as a key indicator of any possible revival in the country's stagnant economy.
Being heavily geared towards exporting, Sony is particularly vulnerable to the strong yen, which has made Japanese firms less competitive on international markets.
Currency effects meant that, although Sony recorded an increase in its overall international sales, revenues in yen terms were flat.
Japanese policy makers are increasingly concerned over the effects of the yen, and have repeatedly intervened to push the currency down - although with little lasting effect.
Personally I don't think the market is ready for the PSP. It's too hi-tech and will only appeal to the sort of people who go for the PSX as a home entertainment people i.e. those with money to burn. PS2 gamers are mostly happy with the PS2, and to be honest most PS2 gamers are also happy with their Gameboys/GBAs as well, so I'm struggling to see how Sony hope to shift considerable numbers of PSPs.
And I'm not suggesting you're making any of it up! :-)
I still don't see them pulling out of games, though. Over-all, it's been their biggest source of income since the launch of the original PlayStation, and I *think* they had a similar situation towards the end of that machine's reign, before PS2 came along.
Sales will obviously be slowing now for the PS2 as so many people already have them, but when PS3 comes along they'll be on the up again - I'm fairly certain of that.
I'm not making this up, you can have a look on the BBC webby if you like.
> Anyway, yes, as I pointed out in FOG, this could mean Sony may
> seriously consider doing a "Core Competency" move, and
> backing out of the games market, as their competitors are performing
> admirably by comparison.
Pull out? Somehow I don't see that happening.
Not surprising that their competitors are "performing admirably" really, is it? Everyone and his dog already owns a PlayStation 2, so sales are bound to slow at some point - while the competitors play catch-up.
As we all know, though, the majority of the money in the console industry is made on games sales, not hardware. And it's been a very slow few months for decent games generally.
"Sony encourage mass breeding programme in Tokyo".