Games sector is "weak" - Sony CFO

Sony's chief financial officer, Nobuyuki Oneda, has warned that the games sector "is weak" and presents "a major challenge" after the company posted a drop in profit of more than 90 per cent.

During Q2, Sony's profits fell from YEN 28.5 billion (EUR 190 million) to YEN 1.7 billion (EUR 11 million) - with the loss attributed to costs incurred by a laptop battery recall and PS3 development.

The games division made a YEN 43.5 billion (EUR 289 million) loss, attributed to the investment required for manufacturing, marketing and research costs for the PS3. Sales and operating revenues also fell by more than 20 per cent to hit YEN 170 billion (EUR 1.13 billion).

Although sales for the Sony group rose by 8 per cent to YEN 1.85 trillion (EUR 12.3 billion), attributed to an increase in demand for flatscreen TVs, the company incurred costs of YEN 51 billion (EUR 339 million) due to the global recall of 9.6 million notebook batteries.

Speaking at a news conference, Oneda said that without the battery recall and PS3 costs to contend with, "We would have been on track with the midterm plan, or more than that.

"But the game segment is weak and is the major challenge for us now," he added.

PS2 software shipments during the quarter were down by 3 million units to 47 million, but the figure for PSP software rose from 9.9 million to 12.9 million units. PS2 and PSP hardware shipments rose to 5.02 million and 3.89 million respectively. However, both hardware and software sales were down overall, with sales and operating revenue standing at YEN 170.3 billion (EUR ).

Earlier this month, Sony was forced to slash its financial forecasts for 2007. However, the company still expects to ship six million PS3 units by March.