Despite the many reported losses that the games division of Sony is reportedly getting due to the less than dominant performance of the PlayStation 3 so far, it is surprising to hear that the company still predicts profits for the fiscal year.

The company as a whole forecasts a record profit for the fiscal year through March 2008 at US$ 2.7 billion. This profit is attributed to booming sales of flat-panel TVs and digital cameras.

So when can we expect the games division to recover?

According to an Associated Press report by Yuri Kageyama, a Sony executive said that Sony will lose about US$ 413 million in this fiscal year, and recovery from the losses won't come until the arrival of more games to play on the PlayStation 3. Senior Vice President Takao Yuhara said that what's most important for Sony right now is software.

Yuhara declares: "In every region, our software lineup will be strengthened."

Great. So yet another executive/analyst/company spokesperson says that the PS3 needs more games. That's certainly something we haven't heard before?

However, given that the company reports that they're still foreseeing a massive influx of profits, especially from their HD TVs, perhaps their High Definition strategy for the "Next Generation" is more on track than others have thought.

By now, you already know about the production of the 65nm CELL for the PS3, but during Sony's quarter-end earnings call, CFO Takao Yuhara provided some new bits on the PS3's manufacturing costs decrease.

Apparently, aside from the move to 65nm, there would also be a component update which aims to lessen the parts inside the console. As to the specifics of the component update, well, that's open for speculation...for now.

Website beyond3D speculates that the update could involve the removal of the EE+GS chip, used to enable backwards compatibility. They think this would make sense because Sony is already hard-at-work to perfect PS2 software emulation, "removing the legacy hardware would reduce both chip expense and motherboard complexity."

Aside from that, the Sony CFO indicated that as of December, blue laser diode yields have dramatically improved, and that the six million PS3s shipped by the end of March is still attainable.

The PS3's manufacturing costs would decrease, will its retail price follow the same path? Takao Yuhara said that we shouldn't expect price cuts, Michael Pachter said that it is very possible. Well, we just have to wait and see what happens next.

  

Sony's Tokyo execs cautiously doused flames of hope that price cuts on the PS3 would be coming anytime soon. Even with the PS3's faltering sales and the 65nm CELL production, Senior Vice President Takao Yuhara stressed that no additional price cut has been decided. But he has said that pricing is among the factors that SCE Japan is eyeing as it expects to break even in its poor game business performance by the next fiscal year. Yuhara added, "We may look at the price as part of our strategy to expand the market when the timing is right."

The PS3 launched both in Japan and in the U.S. last November, but because of production problems that soon gave way to stock shortages, the console's launch in Europe has been moved up all the way to March. With last year's profit loss from October to December by 5%, Yuhara speculates that the turnout of the ¥200 billion (US$ 1.6 billion) operating loss could be worse. And to think they actually invested more to market the PS3.

Sony hopes to break even in gaming during the following fiscal year, its end signalled by the PS3's launch in Europe. He reiterated, "Such factors, including price cuts to some extent, are factored in" the company's break even plans.