Nintendo shines while Sony struggles

The contrasting fortunes of two of the biggest players in the global gaming market were underlined today when Sony announced a 94% plunge in profits for the most recent quarter, while Nintendo said its profits over the first half of the fiscal year had more than tripled.

Sony said the combined cost of its global recall of potentially faulty PC batteries and developing its next-generation game console, the PlayStation 3, had shrunk profits for the July-September quarter to 1.7bn yen (£7.6m) compared with 28.5bn yen for the same period a year earlier.

Almost every major PC maker, including Dell, Apple and Lenovo, are involved in the recall of 9.6m Sony-made lithium-ion batteries that have, on a handful of occasions, overheated and, in one case, caught fire. The fall in profits offset a slight rise in overall sales for the second quarter to 1.85 trillion yen and overshadowed news of strong demand for flat-screen TVs, which are expected to post a profit in the next quarter.

Sony's 43.5bn yen loss in its gaming division was blamed on extra costs related to the PS3, which will go in sale in Japan and the US next month. The European launch has been delayed until March because of supply problems with a component for the console's Blu-ray disk drive.

The division was also hit by the decision last month to cut the price of the PS3 in Japan by 20%. Sony, however, said it still expected to ship 6 million PS3s worldwide by March.

Nintendo's Wii console will also debut next month, setting off what many expect will be a fierce three-way battle for control of the $30bn dollar global video game industry.

The firm said brisk sales of its handheld console, the Nintendo DS, and software titles had pushed its group net profit for the first half of the year up by nearly 50% to 54.3bn yen.

The firm, which is behind a string of popular games including Super Mario, Pokemon and Donkey Kong, said its operating profit over the six-month period had more than tripled to 67.1bn yen, up from 19.6bn yen a year earlier. Group sales rose almost 70 percent to 298bn yen.

Nintendo sold just over 10m DS consoles in the April-September period compared with 3.5m a year earlier. Today raised its sales forecast for the current fiscal year by 3m units to 20m.

By contrast Sony, which sold 14m of its handheld PlayStation Portable consoles in the 2005 financial year, reduced its target for this year from 12m to 9m machines.

Last week Sony's continuing woes forced it to slash its full-year operating profit forecast by 62%.