Sony Discloses Sluggish PS3 Q1 Sales, Not Shipments

Sony Computer Entertainment Inc. parent company Sony Corp. announced its first quarter fiscal year 2007 results today, detailing less-than-expected sales of PlayStation 3 consoles at 710,000 units sold worldwide. The disclosure of actual unit sales to retailers and other outlets rather than production shipments marks a policy change for SCEI. Despite this change, Sony CFO Nobuyuki Oneda said in an analyst conference call that the company's previous estimates of production shipments for PlayStation hardware remain as sales estimates for the fiscal year. The company now predicts it will sell, rather than ship, 11 million PlayStation 3 consoles, 10 million PlayStation 2 consoles, 9 million PSP units, and 250 million software titles worldwide by the end of March 2008. The low number of PS3 sales for the quarter have increased Sony's inventory of the console to around 2.3 million, up from 1.9 million at the end of the previous quarter, with in-transit inventory estimated at 600,000 units, according to Oneda. Sony Corp. subsidiary SCEI, parent company of Sony Computer Entertainment America, posted a $237 million loss for the quarter ending June 30. The deficit comes from the continued selling of PS3 consoles at a loss, and marks a 9% increase from the operating loss posted during the same period last year. Overall sales during the quarter actually increased 60.5% year-over-year to $1.598 billion, an escalation brought on by the availability of the PS3 as well as a 52% increase in PSP sales and a 16% increase in PS2 sales. During the conference call, Oneda said the key to stopping SCEI's losses would be the upcoming introduction of a 65 nanometer process for both the PS3's main Cell processor as well as the console's RSX graphics chip. "In the migration to 65nm, Cell will be the first to make that transition. I cannot tell you when this will happen specifically, but during the peak production time," he said. "Please understand that this transition will be made, and RSX will be later. So the removal of the negative margin will be when all of these factors will come out."