Sony slashes 2008 earnings forecast by 38% - PS3 profitability uncertain

Harsh reminder: despite being tasked by shareholders to deliver smiles to people's faces, video game companies aren't impervious to the worldwide economic d-d-d-downturn. Take Sony for example, who today slashed its 2008 earnings forecast by 38% citing "higher than expected foreign exchange losses" – a strong yen makes exports more expensive and, as luck would have it, the rest of the world is a pretty important component of Sony's business. A Tokyo-based analyst told Forbes that this was "just the beginning" for Sony and that "given the track record of this company, it will under-deliver all the way." Ouch!

But it's not just the yen picking up; a global recession will take a bite out of entertainment spending, meaning things like LCD TVs and 4D game consoles may not fare so well. "Sony will make further losses in televisions, videogaming and mobile phones ... despite early 2008 promises of profits in TVs and its PlayStation3 videogame console," writes Forbes. Add in a steeper price than the competition – and no sign of a price drop – and you've got a recipe for red ink stew.