Sony's financial report is up

[NJ5]

Sony still feeds its 4500 software engineers and none have been sacked as far as I know

Wrong:

Wave of Sony layoffs reaches SCEA

160 jobs at risk across Sony Europe

All consoles are close to profitability at this time at the manufacuring level

Not necessarily, in fact I don't think so. Sony was never expecting to break even on hardware until near the end of the fiscal year, furthermore the US dollar and Euro have weakened a lot against the Yen. So much indeed that if convert the current prices to Yen, it looks like the PS3 had another price cut. This is something they didn't factor (and couldn't have factored) in their previous estimates. The same goes for Nintendo and every other Japanese company.

By the way, the US dollar and Euro got even weaker after the 2nd quarter ended, so the 3rd quarter will be even worse in this respect.

Something went wrong in the 2nd quarter at SCE, a loss of $350m is illogical (unless some creative bookkeeping took place. Obviously a new factor has entered the picture we know nothing about.

You are jumping to conclusions, as there are enough factors in place to explain why a loss happened. Instead of theorizing so much, you should look at their financial report where they show:

- Revenue increasing from 243.4 to 268.5 billion yen  (year-on-year).

- Profit (loss as negative numbers) increasing from -96.7 billion yen to -39.5 billion yen (year-on-year).

This means that expenses were 340.1 billion yen last year (2nd quarter), and 308 billion yen this year (2nd quarter). They managed to reduce their expenses, even with increased hardware shipments (1 million more units of hardware shipped).

Conclusion: The hard data says they achieved significant cost reductions, their main problem being that revenue barely increased due to price cuts and currency issues. Your "new factor" theory doesn't fit the data.