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October 26, 2006

Gaming companies report earnings

Posted by Kim Peterson at 4:48 PM

This is an apples to oranges to, uh, grapes picture, but the financial reports out today from the three biggest gaming companies are worth looking at together.

First up, Nintendo. The company's profit was up 48 percent in the first half of its fiscal year because the handheld DS player is still flying off the shelves. Nintendo sold 10 million DS units in the first half of the year, up from 3.6 million during the same period last year. It plans to sell 20 million during its full fiscal year -- a shocking number if you think about it.

Nintendo's Wii debuts Nov. 19 in the U.S. for $250. It's pretty much a given that it will sell all of the 4 million it has allocated for the holidays.

Poor Sony. I know, it's weird to feel sorry for a multi-billion-dollar entertainment conglomerate, but the bad news just doesn't stop. The company's quarterly profit plummeted 94 percent for the third quarter, falling to $14 million. Sony was hit hard by the recall of some 9.6 million computer batteries that it made for some of the biggest PC makers out there. On top of that, the company is gearing up for a big price war on flat-screen TVs this holiday.

All of that has precious little to do with the PlayStation 3 system, which goes on sale Nov. 17 in the U.S. for $500 and $600. But Sony has a lot riding on the PS3 -- not just on sales, but on the hope that the console will lead to more money from sales of televisions, accessories and online content. The PS3 could be a bright spot for Sony over the next year, made brighter by the fact that so much else in the Sony universe is dark.

Microsoft announced solid quarterly numbers today, handily beating analysts' expectations with nearly $3.5 billion in profit on $10.8 billion in revenue.

The company said it has sold 6 million Xbox 360 units in the year that they've been on the market, and it's on track to sell 10 million by the end of December. By the end of March, the company is predicting it will have sold 13 million to 15 million.

Its Entertainment and devices Division, which makes the Xbox, is losing less money, with a loss of $96 million compared with $173 million a year ago. And the company reports that it is costing less to make the 360 these days, which is to be expected as component parts drop in price and manufacturing is streamlined.

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