Sony's Second-Quarter Profit Plunges

Record-Breaking Battery Recall Fuels 94% Drop as Nintendo Jumps 48%

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YORK, Pa. (AdAge.com) -- Sony Corp.'s record-breaking recall of almost 10 million potentially fire-hazardous batteries not only has battered the tech giant's reputation but today showed up squarely on its bottom line: Sony Corp. reported a 94% decrease in profit for its fiscal second quarter.
In addition to its battery woes, the manufacturing delays for the coming PlayStation 3 has made for a grim second half for Sony.
In addition to its battery woes, the manufacturing delays for the coming PlayStation 3 has made for a grim second half for Sony.

The heavy losses from the battery recall, already at $429 million, coupled with manufacturing delays for the coming PlayStation 3 video-game platform, paint a glum picture going into the key holiday selling season. Sony had already increased expected losses for its gaming division and lowered forecasted sales of its hand-held gaming device, PlayStation Portable, from 12 million to 9 million units for the year.

Strength of Nintendo's DS
Meanwhile, Nintendo announced today that its profits jumped 48% for the first half on the strength of its DS hand-held device and software sales, and said it's on target to sell 20 million DS machines this year.

Electronics provided some of the only bright spots in Sony's quarterly report, with sales of Bravia flat-panel TVs, Vaio computers and Cyber-shot digital cameras up year over year. However, even that good news was dampened by executives' guidance that prices of LCD TVs are expected to drop faster than expected, cutting into those profits.

Sony Computer Entertainment America still plans to launch an extensive marketing campaign for the PlayStation 3, tagged "Play Beyond," which was created by TBWA/Chiat/Day, Los Angeles. Details are expected next week.
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