Tech News : Sony to lose $413M in video games unit

Sony will lose about 50 billion yen ($413 million) in its video games business this fiscal year, and recovery won't come until the arrival of more games to play on the PlayStation 3 machine, a company executive said Thursday.

"The main point is that the PS3 will still be producing operating losses," Senior Vice President Takao Yuhara told a small group of reporters at Sony Corp (NYSE:SNE - news).'s Tokyo headquarters.

On Wednesday, Sony reported that losses for the January-March quarter widened to 67.6 billion yen ($563 million) from a 66.5 billion yen loss a year earlier, largely on launch costs for the PlayStation 3, which went on sale in November in Japan and the U.S., and in March in Europe.

But Sony, which makes Vaio personal computers and Walkman portable music players, forecast a record profit for the fiscal year through March 2008 at 320 billion yen ($2.7 billion).

Booming sales of flat-panel TVs and digital cameras that have been lifting sales are expected to continue and boost Sony's earnings in coming months, Yuhara said.

Although PS3 losses are expected to shrink with cost cuts this fiscal year, the key lies in having Sony and outside game-makers produce attractive games to play, which fully exploit the machine's expensive technology, he said.

"What's most important is software," Yuhara said. "In every region, our software lineup will be strengthened."

Sony's revival efforts, led by Welsh-born American Howard Stringer, Sony's first foreign chief executive, may finally be starting to pay off. After taking the helm in 2005, Stringer got Sony to drop unprofitable businesses, sell off assets, reduce jobs and shutter plants. But losses from PS3 remain Sony's biggest headache.