Sony is expecting to close 2008 with a net profit 38% lower than was expected, with the company's games division actively losing money for the electronics and entertainment giant.

"The Japanese firm's outlook is bleak," wrote Forbes, citing a surging Japanese yen as hurting Sony's ability to export its products. Added to that, currency exchanges favor Korean rivals in consumer electronics, Sony's bread-and-butter products.

Video games are part of Sony's problem, as the games division has failed to recoup the PlayStation 3's $3 billion development cost and hardware losses despite what Forbes refers to as "early 2008 promises of profits."

Sony's overall profit tanked in its Q2 (July-September), dropping by half to 73.7 billion yen ($754.9 million)--and 60.7 billion of that yen came from one-time sales of some of its holdings.

"This is just the beginning of a big earnings collapse," said a Tokyo analyst to Forbes, speaking anonymously. "Given the track record of this company, it will under-deliver all the way."