Let me dig up some data...

Assumptions:

- holiday software sales for Sony (PS2+PS3+PSP) more or less the same as last year

- Revenue in the same quarter last year was 581 billion yen, with 12.9bln yen in profit

- 80% of the game division's sales are abroad (it's probably more)

The same analysis I made for the OP (not considering PS3's production cost reductions for example) would lead to a $500 million loss which is not gonna happen due to that factor. It also helps that PS3 software is more expensive than PS2 software.

After considering these factors, I'd say a $200 million loss at least, but the gaming division is harder to predict...

Pretty much agree with all those

The reality is the gaming recession proof sales cannot last forever can it. Every boom has to have a bust and in all honesty i think 2009 will be it.

Each console/format has some awesome games coming for this year but if you add them up as a collective they wont be as big as the games we saw from 07 but more importantly 08. The one game that will sell shead loads is obviously the Halo expansion. Then we have Street Fighter 4 and Resident Evil 5. Those 2 games are the ones im pumped up for the most. But beyond that there isnt anything really that we could say was a Call of Duty or Gears type selling game. People said LBP and Resistance 2 would sell millions but they didnt so that is why i believe Killzone 2 wont either. The first person shooter genre has been done to death and it just doesnt looklike adding anything to it. Games like Bioshock/Dead Space etc.. look for new ways to use the genre and they excell because of it.

Games like God of War 3, Gran Turismo 5 and Final Fantasy 13 i doubt very strongly we will be seeing this year. So if we assume they wont be coming this year leaves very few if any what i would call A+ games coming this year.

But that is not a bad thing, far from it. I think this generation is crying out for new IPs and this year we could have some potentially awesome new ones.
Of course as the months go by the companies will announce their games for the year especially Microsoft (remember the breaking the bank announcement?) so no doubt some franchises will have a few new additions coming i.e new Zelda game.

But the Gaming division can't lose that much money in a Holiday quarter. Sony's last Holiday quarter made a few $100 million profit, and in 2008 there wasn't even a price reduction on the PS3! Well, now you might say look at the strong yen, but as the guy above pointed out, HW components are priced in Dollars and the PS3 is manufactured in countries that don't have the yen (China?).

That doesn't really matter, that was always the case. Sony's figures are in Yen and most of the revenue is in dollars. Hence a higher Yen means that the same amount of income in dollars will be a lower amount of income in Yen.

For example the most expensive part of running a business are the employees. Most of those are paid in Yen.

 But if the hardware components are bought with the revenue Dollars, and the labor people at the factories in China are paid in yuan (or whatever the currency is there) or Dollars, then not only the revenue shrinks due to high yen but also the expenses do.

Not to mention most of the economy crashing happened AFTER the last earnings report. Using last quarters earnings as guidance is foolish at best.

Read the last earnings adjustment, the value of the Yen had a HUGE effect on Sony's earnings. If you read the report, a 5% change lost them nearly $1.5 billion. Now the Yen has moved another 10%, that will have a MASSIVE effect on the earnings.

The yuan also strengthened against the dollar and euro last I checked. Sony's CFO himself says the Euro vs Yen is big trouble for them in the last link I posted in the OP.

You're seeing it wrong. The expenses in dollar countries stay the same, since most revenue is from dollars. The expenses in Yuan might be a little smaller, but that's peanuts compared to the real issue.

It's like this: Revenue-Expenses=Profit
Expenses stay more or less the same, sure maybe some Chinese labour is cheaper, but all Japanese people (much more) are relative to the main currecy of income more expensive.

The real issue (again) is the revenue in dollars. Let's say a $400 PS3 was worth Y1000 and now Y800 (completely fictional values, but the difference is more or less 20%), you can see that for millions of dollars the amount of difference becomes pretty big. Add to that that Sony is (in)Famous for its low margins and a high Yen can mean the difference between profit and loss.

Yeah it is possible. I am rather more interested how much they earn from Home at this moment;

Yes. Sony has orphaned stuff before if it's underperforming. It's selling, but they continue to lose money on it. After a while, it will reach a breaking point. Look at past consoles - reaching 40M is an awesome task.

I think Sony will eventually cut their losses, drop the PS3 and launch the PS4 early. Early? 2011 or 2012.