Sony's quarterly loss widens

The big remaining problem in Sony's sprawling entertainment empire is the PlayStation 3, which is so packed with sophisticated technology it has been a money-loser since its launch in November. The machine was also burdened with earlier hefty development costs.

Sony officials have acknowledged setting the PS3 prices at below production costs also eroded profits, and have repeatedly warned that the gaming division would be in the red. They said the PS3 business would likely stay in the red this fiscal year.

Also, intense competition with Nintendo's hit Wii, with its unique wand controller, appears to be hurting the Playstation 3.

Sony shipped 5.5 million PS3 machines in fiscal year just ended, fewer than the 6 million the company had targeted. Nintendo shipped 5.84 million Wii machines worldwide during the same period.

But Sony is promising a recovery in the gaming unit when the lineup of PS3 game software strengthens over the summer, helping make the machine more popular. Sony is expecting to ship 11 million PS3 consoles for the fiscal year through next March.

"The PS3 business will really get off the ground this fiscal year," Oneda said.

Sony's biggest improvement came in its electronics sector, where sales jumped in all major regions, gaining 7 percent on year in Japan, 8 percent in the U.S. and a hefty 24 percent in Europe in the fiscal year through March 31.

Sony's pictures division also did well in fiscal 2006, seeing sales increase 30 percent and operating profit surge 56 percent, thanks to better theater and home revenue from "The Da Vinci Code" and "Casino Royale."

Sony's joint ventures produced mixed results.

Sony Ericsson, the joint venture in cell phones with LM Ericsson, saw profit and sales rise as it shipped 51 percent more cell phones from the previous year at 83 million handsets.

Sony BMG suffered a drop in sales and profit, largely because of an overall decline in the music market. Best-sellers included Justin Timberlake's "Future Sex/Love Sounds" and Beyonce's "B'Day."

The latest results show the key strides Sony has made in playing catchup after falling behind rivals such as Sharp Corp. and Samsung Electronics in flat panel TVs and Apple in digital music players.

"Those bullish forecasts seem to reflect Sony's gaining confidence in itself," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

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