Sony’s (SNE) Yellow Flag

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Sony’s (SNE) results for the quarter were just fine. According to MarketWatch: The company’s net profit more than doubled in the fiscal first-quarter because of a weaker yen against the U.S. dollar and the euro, although operating losses widened at its gaming division. Net profit for the April-June period jumped to 66.5 billion yen ($540 million), or 32.25 yen a share, from 32.3 billion yen. Sales rose 13.3% to 1.98 trillion yen.

But, the company added it was "more cautious about the business environment for the remainder of the fiscal year for the electronics and game segments compared to our May forecast".

What that probably means is that PS3 sales are very poor. That could mean more price cuts and a larger marketing budget. Which means worse loses in the game division which could start to eat even more into the operating profit for the parent, which is being driven by sales of consumer electronics, especially digital cameras and expensive TVs.

The PS3 is becoming more of anchor. The boat can only drag it for so long.

Douglas A. McIntyre