Just when Sony appears to have turned around its electronics business, another part of its sprawling empire -- video games -- is dragging down profits. The Japanese electronics and entertainment company on Tuesday blamed the launching costs of its PlayStation 3 game console for much of the 5 percent drop in group net profit for the last three months of 2006 to 159.9 billion yen ($1.3 billion).The PS3 launched in the United States and Japan in November, plagued with production problems that resulted in shortages and will keep the machines out of Europe entirely until March. The next-generation game player also faces immense competition with Nintendo Co.'s Wii and Microsoft Corp.'s Xbox 360.

"Startup costs are high, and the losses (in the gaming division) will continue for some time," Chief Financial Officer Nobuyuki Oneda told reporters.

Sony Corp. raised its earnings forecast for the fiscal year through March by 38 percent, however, citing a recovery in its core electronics division amid booming Christmas sales in digital cameras and flat-panel TVs.

Source : Associated Press