Sony says PlayStation 3 shipments on target

Chubachi said Sony is working to cut PS3 production costs, and expected to see the effects of that next year. A weak yen against the euro is also expected to minimize losses it makes on consoles sold in Europe and play to Sony's advantage.

He also said a recent management reshuffle — which saw technology guru Ken Kutaragi relieved of day-to-day responsibilities as president of Sony's game unit — was meant to reflect more emphasis on software development and marketing elements of an increasingly vital business for the company.

"With the PS3 launch, the entire game industry will expand. Its positioning within the Sony group is larger than ever," Chubachi said.

Kutaragi, also known as the "father of the PlayStation," was technically promoted from president to chairman of Sony's gaming arm. But in Japan, such a move sometimes disguises retirement or demotion — and analysts have expressed concern that Kutaragi was sidelined over difficulties in the PS3 launch or that the move signals serious disagreements within the group's executives.

The PlayStation 3's success will be critical to helping a company struggling to gain lost ground to rivals in digital music players and flat-panel TVs.

Welsh-born American chairman Howard Stringer — the first foreigner to head Sony — has closed plants, wiped out divisions and trimmed jobs in an attempt to turn round the company's fortunes.

But recovering sales got devastated by a recent massive global battery recall, which cost the Japanese electronics and entertainment company $438 million in the third quarter.

Almost every major laptop maker in the world, including Dell Inc., Apple Computer Inc. and Lenovo, has announced recalls of Sony lithium-ion batteries that could overheat and burst into flames

Startup costs for the PS3 have also battered Sony's books, sending its profit for the July-September quarter plunging 94 percent to $14.6 million.

Sony shares rose 1.8 percent to $42.45 Thursday in Tokyo, little changed from the morning close before Chubachi's comments. The company's share price has fallen by almost 20 percent since April.

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