You can't just add one side of the equation into a financial report. If you produce some stock of a gadget, you obviously add manufacturing costs to your report. However, you now have new inventory and possibly removed some old inventory (components in stock to build the gadgets) which you have to give a value  =asset in your financial report. You can't put a zero in there. Exactly _what_ value you add there is one of the points I mentioned above which could tweak your bill to either side.

It's an improvement from terrible to bad.  You can look at it as a good thing but fact remains they made a significant loss despite having the profitable PSP and PS2.  It is quite different from going from profit of let's say half a billion to profits of a billion.  The PS3 right now looks like it was a very very bad idea for Sony. 

To everyone in this thread that's trying to downplay the losses: SCE is supposed to make money. If things continue like this it will mean a third financial year of losses in a row.

This will have a negative effect on the games that Sony will release (Eight Days, The Getaway anyone?) and on Sony's next console.

The cumulative losses on the PS3 are enormous and will certainly lead to a change in strategy at SCE.

It seems like the usual suspects are trying to mainly focus on the bad news to downplay any success SONY has with the PS3. The big picture is that SONY is taking a hit to provide consumers a quality product with a growing demand while taking steps to help improve what they are doing to provide that product. I'm encompassing all while some of you are are not, painting a false picture of near total negativity when this is not the case. The PS3 would be a "very very bad idea for Sony" if operation losses stay the same if not worse while the demand for the PS3 has not increased. It's opposite has happened so it's reasonable to say that an encouraging positive outlook for the PS3 is deserved.

Look where the "losing money on hardware" strategy got them.

Sony as a whole did bad too. $200 million in profit, which is a 70% reduction from last year's figure and gives them a profit margin of 1%.

With the strengthening yen and the economy getting worse, they're going to get slammed this year and may have to restructure some parts of their business.

The big picture is that you're in a financial thread and that making a loss is a bad thing for Sony. This is not a fanboy thing where you can argue whether sales are fine or not, losing money, your shareholders money, is a bad thing. Always.

Sure the Ps3 is doing fine saleswise, but if SCE is unable to translate in to positive figures that's not important. And yes, at this moment the PS3 looks like a very bad business decision, since they lost loads of money over it, despite the quality of the product. I don't ever see them breaking even on the PS3 project tbh.

That was pretty much a given from the moment they lost more money on it than they made on the PS2.

See, that's the key. Taking a loss in the gaming division is never a good thing while no one ever said it was.  But some users here who have done virtaully nothing but downplayed anything positive about the PS3 are claiming that the PS3 was a bad move by SONY when in fact we can account a lot of the losses was the cause of a failing economy.

That doesn't make sense. The PS3 was losing more money when the economy was "fine". Obviously the economy is not helping Sony as a whole, but it doesn't seem to be reducing PS3 demand. The strengthening yen hurts the gaming division, but I doubt this division would be in a much better position even if that didn't happen (in this quarter I mean).

Sony as a whole is a different story of course.

I'm telling you guys now, if theres a PS4 in a couple of years don't be surprise if they have taken a bite out Nintendo's business model in regards to hardware.