Sony may struggle with profitability of the Playstation 4. IGN reports that eventhough Sony is winning the race for buzz and consumer goodwill over it's rival Microsoft but previous choices made in recent years may hinder company profit once the console drops.
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As we reported last week, Sony turned a very modest profit in the last fiscal quarter. However, Bloomberg reports that the U.S. dollar’s rise against the Japanese yen may end up hurting Sony’s PlayStation division’s ability to deliver a strong performance on the balance sheet.
“Those currency related losses [from the quarterly report] are poised to deepen as analysts project a further 10 percent rise in the dollar by the end of Sony’s year in March, based on 74 analysts’ estimates compiled by Bloomberg,” the news agency notes, stating later that, “While the weaker yen will lift the value of sales abroad for the new PlayStation 4, margins will be crimped as parts and production are paid for in dollars.”
Sony originally “agreed to pay suppliers in U.S. currency to reduce costs as it made plans to challenge Microsoft in the U.S. video-market.” This was a move designed “to shield its PlayStation game unit from a strengthening yen,” but now that the dollar is on the rise, the move is “backfiring.”