UPDATE 2-TECHSHOW-Sony's Hirai eyes PS3 profit as costs decline

Mon Jan 7, 2008 7:20pm GMT

Related Topics

Quotes

   

(Updates Sony stock price)

By Franklin Paul

LAS VEGAS Jan 7 (Reuters) - Sony Corp (6758.T) (SNE.N) gaming chief Kaz Hirai hopes to turn a profit on the PlayStation 3 console business in the entertainment conglomerate's next fiscal year, fueled in part by falling costs for the parts used to make the device.

"We want to get to the positive side of the equation as quickly as possible," Hirai, who is chief executive of Sony Computer Entertainment, said late on Sunday on the sidelines of a news conference at the Consumer Electronics Show in Las Vegas.

Shares of Sony American Depositary Receipts rose as much as 4.3 percent to $54.66 on the New York Stock Exchange. At mid-afternoon, the ADRs were up $1.70, or 3.24 percent, at $54.12.

"The next fiscal year starts in April and if we can try to achieve that in the next fiscal year that would be a great thing. We are going through the budgets right now. That (profitability) is not a definite commitment, but that is what I would like to try to shoot for."

His comments came after Sony announced stellar holiday sales for the PS3. The company said on Sunday it sold 1.2 million PlayStation 3 video game consoles in North America over the period, two-thirds what it sold in the rest of the year.

The Tokyo-based electronics and entertainment conglomerate currently loses money for each PS3 it sells.

Sales of the PS3 have lagged those of Microsoft Corp's (MSFT.O) Xbox 360 and Nintendo Co Ltd's 7974.OS Wii consoles due to what analysts say is its lofty price and a dearth of must-have games.

Great games, which draw consumers to buy the console, matched with declining component prices, will hopefully lead to profitability for the PS3 and the company's gaming division overall, Hirai said.

"Component costs are coming down, and the number of components ... we are seeing a reduction," he said. "The 40 gigabyte PlayStation 3 obviously has fewer components (than more powerful models), and uses less power, which means that components required to dissipate heat, for example, can be smaller, so there is some cost reduction there."

"So costs are coming down significantly," he added, noting that the decline is in line with what the company had expected. (For more from the Consumer Electronics Show, please visit the MediaFile blog: blogs.reuters.com/mediafile/) (Reporting by Franklin Paul; Editing by Quentin Bryar, Richard Chang)

FILED UNDER: