That being said, Sony stated that most of their losses were due to PS3 pricing issues.

what does LTD mean? and does by 'shipped' do they mean the amount of consoles sent to stores, or do they mean sold to customers ?

LTD - Lifetime to date. In other words, the total number sold since launch.

Shipped usually means sold to retail stores.

This is good news as it doesn't rule out more 360 price cuts in the near future. In this particular quarter MS could've sold each console for $91 less and still broken even in E&D. (subsidised by software sales, but still)

 The basic idea here is that people are saying that since the PS3 accounts for the vast majority of the companies losses right now they are taking (total losses)/PS3's shipped = ~$600.  Its not entirely accurate however as there are a lot of other factors at play.

 It does however illustrate, in a somewhat dishonest way, the very real problem that Sony is having with the PS3 right now.

If Sony blames the bulk of the loss on PS3 hardware sales, what kind of loss are they going to take next quarter when the price cuts are in effect and holiday sales spike? 1.5 billion?

I never thought the PS3 could be this big of a failure. Sony could end up sporting an MS-style $5 billion debt by the end of this generation if this keeps up.

Ugly stuff.

If I'm understanding things correctly, it won't be as bad during the next few quarters since they took the hit of reducing the value of their inventory during this quarter. In other words, they recalculated their inventory's value by reducing the value of each PS3 they have there.

But according to Sony themselves, they'll still be losing money on hardware even in the next fiscal year!