Sony sinks into Q3 loss, Nintendo cuts outlook

Sony Corp. fell into the red in the latest quarter and reiterated its forecast for a record annual loss due to sliding demand and a stronger yen, while rival Nintendo Co. cut its full-year outlook for the second time in three months.

Nintendo posted a 21 per cent rise in operating profit for the October-December quarter, benefiting from strong holiday sales of its Wii game console and DS handheld game player and proving its resilience in the face of an economic slump.

But the video game maker cut its profit forecast for the year to March by a much larger-than-expected 16 per cent while lowering its sales target for the Wii slightly, a move that could raise worries over its growth potential.

"It will be a major shock for Nintendo bulls out there if they are reducing Wii unit guidance because people expect this to go up," said Hiroshi Kamide of KBC Securities.

Nintendo's new operating profit forecast of €4.5 billion for the year to March would still be a record figure, a sharp contrast to Sony, which is heading for its biggest operating loss on record and its first in 14 years.

Nintendo's strategy to broaden the gaming population by offering innovative but easy-to-play games has been a roaring success, with the Wii far outselling Sony's PlayStation 3 and Microsoft Corp.'s Xbox 360 since its debut in 2006.

Sony has been battered by falling prices and slumping demand for flat TVs, digital cameras and other electronics products, while also having to shoulder massive costs to close factories and cut jobs.

The maker of Bravia LCD TVs and Cyber-shot digital cameras reiterated a forecast unveiled last week for a record €2.2 billion operating loss for the year to March, a big swing from the €4 billion yen profit logged a year earlier.

As inventories pile up and prices tumble, Sony is feeling the pinch of the downturn in every corner of its operations, which range from semiconductors to movies and insurance.