Sony: Batteries, PS3 Will Cut into Profits

Sony's financial problems became a bit clearer on Thursday as the company warned that its yearly profit would be about 62 percent lower than previously forecast, both due to the massive laptop battery recall and price adjustments to the PlayStation 3.

The company also gave a better idea of the total cost of the battery recall to date. Sony will set aside 51 billion yen ($429 million USD) for costs associated with the issues, which would appear in last quarter's financial reports. The end result would be a much less profitable Sony.

Instead of the 130 billion yen quarterly previously forecasted by the electronics maker, Sony now forecasts a 50 billion yen profit. Any remaining profits could be wiped out if either the PlayStation 3 does not sell as planned, or companies demand more compensation for the recall.

Toshiba, Hitachi and Fujitsu all say they will review how the recall has affected them and may ask for further compensation above and beyond what they are receiving to pay for the replacement batteries, which could push the total cost of the recall to nearly $1 billion.

Sony admitted that the new figure does not include any possible legal actions stemming from the recall, meaning there is the possibility a future forecast could revise numbers lower.

Sony's powerful gaming division is also contributing to the downward-revised profit numbers. Slower than expected sales of the PlayStation Portable, combined with a 20 percent price cut in the PS3 in Japan will double losses in the gaming unit to 200 billion yen, it said.