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Sony turns job axe on the US

Reports operating loss of $1.91bn

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Sony has confirmed it intends to cut jobs at its Computer Entertainment Unit in the US, just two months after it announced plans to slash eight per cent of its European workforce.

The troubled firm's game division reported an operating loss of $1.91bn for the year ended 31 March due to the high-costs associated with its PlayStation 3 console. Sony appears to have failed to re-coup those expenses because of the immense popularity of Nintendo's Wii.

In fact, according to recent figures published by the Japanese games magazine publisher Enterbrain, the Wii is currently outselling the PS3 by at least four to one in Japan, while in the US, it was the top-selling new console for the fourth consecutive month in April, with some 360,000 units shifted versus just 82,000 for Sony's latest machine.

Closer to home, the Irish Independent reported in mid-May that the 20,000 Sony PlayStation 3's that shipped to Ireland for the long-anticipated launch of the console on May 23 hadn't sold out, although local representatives claimed at the time that sales were 15 per cent above its target.

Priced at a whopping €629.99 on its release, the PlayStation 3 is considerably more expensive than either the Wii or Microsoft's Xbox 360 console. In addition, a shortage of the diodes necessary to operate the PS3's Blu-ray disk drive meant that Sony was the last of the three console makers - Nintendo, Microsoft and Sony - to release its next-generation box.

News of Sony's decision to reduce its headcount at its US games division, leaked out on Wednesday via a number of blogs. At present it's not known how many jobs are to go but estimates suggest that as many as 100 out of the unit's 1,500 staff could soon be looking for alternative employment.

Sony has also said that it is looking at ways at restructuring its games unit in Japan, although it hasn't released further details as yet.

Whether Sony can claw back market share from Nintendo remains to be seen. In April, Nintendo announced that it had shipped over 5.84 million Wiis during its first five months on sale, and sold some 29 million games. The company is projecting sales of 14 million units of the console in the coming year along with 55 million games.

Copyright © 2007, ENN

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