Sony Profits Take Huge Quarterly Hit

Industry observers and Wall Street will be watching for some positive signs of economic rebound for Sony in the upcoming holiday season in the wake of last week's very negative numbers. Sony profits plunged 94 percent in the firm's second fiscal quarter. A 9.6 million battery recall affecting several major laptop co
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Industry observers and Wall Street will be watching for some positive signs of economic rebound for Sony in the upcoming holiday season in the wake of last week's very negative numbers.

Sony profits plunged 94 percent in the firm's second fiscal quarter. A 9.6 million battery recall affecting several major laptop computer makers--as well as a loss in its video game business--will likely wind up costing the Japanese firm more than a half-billion dollars (not including possible litigation stemming from the battery fiasco).

Sony's net profit for the quarter totaled $14 million--compared to $242.4 million for the same period last year.

The battery recall may have tarnished Sony's brand image somewhat, although no one knows how badly, or for how long. Some independent polls over the years had listed Sony as the most trusted brand name across all industries and product lines among North American consumers.

According to the Associated Press, Sony reported a $366 million operating loss in its games division due to charges related to the preparation of its long-anticipated PS3 (and some production problems with the console's internal Blu-ray Disc drive). A limited supply of PS3 units is set to go on sale later this month in the U.S. and Japan, and not until March in Europe. Sony has also reduced the anticipated price for its PS3 by about 20 percent, which will further cut into profits.