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Thursday, December 14, 2006
Sony keeps PS3, Margin Targets


Sony said on Thursday it has no plans to change its targets for shipments of its hot-selling PlayStation 3 and operating profit margin, signaling its recovery is on track despite drawbacks such as battery recalls.

A slew of bad news for Sony this year including recalls of 9.6 million notebook computer batteries has brought its earnings strength under investor scrutiny, and the outlook for PS3 shipments has been closely watched after a production glitch.

"It is true that it took us some time to bring the PS3 to mass production as blue laser availability worked as a bottleneck," Sony President Ryoji Chubachi told a media round table.

"But 2 million and 6 million are within our reach," Chubachi said, referring to Sony's targets to ship 2 million units of the PS3 by the end of the year and 6 million by March.

Sony calls the PS3 its most important strategic product of the year. It went on sale in Japan and North America in November, competing with Microsoft's Xbox 360 and Nintendo's Wii in the $30 billion video game market.

Although the targets to ship 2 million by December and an additional 4 million by March were set after Sony had decided to postpone the European release, some analysts were concerned that production may not pick up fast enough to hit the latest goals.

Sony, which has dominated the video game market for the past decade, has packed the PS3 with its cutting-edge technology such as a Blu-ray high-definition optical disc player and the Cell microchip, dubbed a "supercomputer on a chip."

But the advanced components have driven up production costs.

Sony offers the basic model of the PS3 at $499 in the United States, double the price of the Wii, which debuted in the U.S. two days after the PS3 launch.

Nintendo sold 476,000 units of the Wii in the United States in November, more than twice the number of PS3s sold, according to research group NPD.

Chubachi also said Sony has been studying the feasibility of putting the Cell microchip, originally developed to drive a game machine, in its consumer electronics products, but stopped short of mentioning specific products.

"If realized, it would be a highly important component that would make our consumer products as well as industrial products stand out among competitors," he said.

Chubachi also said Sony plans to stick to its target to achieve a 5 percent operating profit margin for the year starting next April.


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