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I would take the SCEE President's word for it and say that no the hardware is not profitable now but they are profitable on software.

 

http://www.thebitbag.com/2008/12/19/no-price-cut-for-ps3-anytime-soon-at-least-in-europe/

Our target this year is to break even, not on a cumulative basis, but on an operating business. Our point of view from the 100 markets we work in, we have PS2 which we’re making a profit on, PSP where we also make a profit, and PS3 where, if we just look at it in Euro terms, we are in a profit on software even though we still make a loss on hardware. It’s likely we will get into profit in Europe this year. So SCEE is a solid, safe pair of hands for SCE.