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Sony Corp reported a negative result in its third fiscal quarter and reiterated that it expects a record annual loss due to falling demand and the rise of the yen, while its rival Nintendo Co. cut its forecast for the entire year for the second time in three months.


Nintendo scored an increase of 21 per cent in operating profit for the period between October and December, thanks to robust sales of its year-end computers for video games Wii and DS.

However, reduced its profit target for the year ending in March by 16 percent, far more than expected, and slightly lowered its sales target for the Wii, a move that generated fears about its growth potential.


"It will be a big impact for Nintendo (...) unit if they reduce the goals of the Wii because people expect that up," said Hiroshi Kamide of KBC Securities.

However, the new estimate of annual operating profit of Nintendo, 530,000 million yen (5,900 million U.S. dollars), still imply a record, which contrasts sharply with Sony, which is heading to its worst loss in history and operational the first in 14 years.


Nintendo said operating profit increased in the quarter to 249,200 million yen from 205,300 million yen in the same period last year.

That result was hardly in line with the average forecast of 247,900 million yen from four analysts surveyed by Reuters.


Nintendo's strategy to expand its client products through simple but innovative games has been an overwhelming success and the Wii in sales exceeds the Sony PlayStation 3 and Xbox 360, Microsoft Corp., since it debuted in 2006.

Sony has been hit by falling prices and stagnant demand for flat screen televisions, digital cameras and other electronic products, while taking huge costs by closing factories and eliminating jobs.


The maker of Bravia TVs and Cyber-shot cameras reiterated a forecast released last week a record operating loss of 260,000 million yen (2,900 million U.S. dollars) in the year ending in March.

This compares with a profit of 475,000 million yen in the previous fiscal year.


A BATTERY OF INVENTORIES

While inventories are stacked and prices fall, Sony feels depression in every corner of their operations, ranging from semiconductors to the film and insurance.


The company reported an operating loss of 18,000 million yen in the fiscal third quarter, compared with a profit of 236,200 million yen between October and December 2007.

Other industry heavyweights such as Samsung, have already reported quarterly losses.