Sony's profit plunged 94 per cent for the July-September quarter as a global battery recall and red ink in its video-game business hurt the Japanese electronics and entertainment company.

Sony Corp.'s group net profit for the fiscal second quarter totalled $14 million US, dwindling from about $240 million US the same period the previous year, the Tokyo-based manufacturer said Thursday.

An extra cost of $429 million US related to a global recall of 9.6 million Sony laptop batteries was a major factor behind the sharp drop in profit.

Almost every major laptop maker in the world, including Dell Inc., Apple Computer Inc. and Lenovo, has announced recalls of Sony lithium-ion batteries that could overheat and burst into flames.

The recall, which has tarnished Sony's brand image as a longtime maker of icon products such as the Walkman portable player and PlayStation video game machine, offset the lift Sony's books got from an eight per cent rise in July-September sales to $15.6 billion US from $14 billion US a year earlier.

Sony reports loss

Sony reported a $366-million US operating loss in its gaming division because of charges related to the preparation for the next-generation PlayStation 3 console, set to go on sale in the U.S. and Japan next month.

Sony said last month the machine's launch in Europe will be delayed until March next year because of mass production problems in a video technology called Blu-ray disk that the machine supports.

The company has also reduced the price in Japan for the much hyped PS3 by about 20 per cent in an effort to win buyers, a move that's likely to reduce sales revenue because initial shipments are expected to be limited and sell out.

Sony kept unchanged Thursday its plan to ship six million PS3 machines in the fiscal year through March 2007. Research and development costs for the PS3 eroded profitability in the game unit, the company said in a statement.

Sony trimmed its fiscal 2006 shipment target for its lagging PlayStation Portable handheld machines to nine million from the initial 12 million machines. Sony shipped 14 million PSP machines in fiscal 2005.

In contrast, Japanese rival Nintendo Co. is scoring success with its DS handheld machine. The maker of Pokemon and Super Mario games said Thursday that its group net profit for the first fiscal half soared nearly 50 per cent.

In the core electronics segment, Sony's operating profit for the three months ended Sept. 30, shrank 71 per cent to $67 million from $236 million a year earlier.

Sony has been trying to turn around its electronics business after getting beaten by rivals on key products such as Apple's iPod and liquid crystal display TVs from Sharp Corp. and Samsung Electronics Co.

American leads revival try

The revival effort is being led by American chief executive Howard Stringer, the first foreigner to head Sony. But questions are already publicly being raised here about the management team of Stringer and Ryoji Chubachi, an electronics expert, following the battery troubles and production delays.

The charge for the battery recall hurt earnings in electronics, despite strong sales of Bravia flat-panel TVs and Cyber-shot digital cameras, Sony said. The absence of last year's gain from a pension fund reimbursement in Japan also contributed to the operating profit decline in that sector, it said.

Such stumbles forced Sony to revise last week its forecast for the fiscal year through March 2007, to $673 million, down 38 per cent from its initial projection and down 35 per cent from fiscal 2005.

It's expecting $69 billion US in fiscal 2006 sales, up 10 per cent from the previous year.

Chief financial officer Nobuyuki Oneda said Sony's liquid crystal display television business, which has been working to reduce losses, is expected to post a profit in the October-December quarter.

Sony's movie business also fared poorly, seeing its operating loss grow to $129 million partly on flops such as Zoom and All the King's Men, it said. Faring better were Talladega Nights: The Ballad of Ricky Bobby, Monster House and Click.