Game plan

Tokyo, Oct. 26 (Reuters): Sony Corp has swung to a quarterly loss due to the mounting cost of recalling millions of computer batteries, coming in sharp contrast to a surge in profit at rival Nintendo Co on its hit DS handheld game machine.

The deep loss at Sony comes despite the boost of a softer yen and robust sales of flat TVs and digital cameras, factors that are expected to have lifted earnings at Panasonic maker Matsushita Electric Industrial, which reports on Friday.

Top personal computer makers including Dell Inc, Apple Computer Inc, Toshiba Corp and Sony itself are recalling up to 9.6 million Sony-made computer batteries, which in rare cases can overheat and catch fire.

Sony kept its forecast for a sharp fall in annual profit and warned that a price war in the flat TV market could heat up.

“I know that companies like Sharp, Samsung and Panasonic will all stage a full-out offensive during the year-end shopping season. We will take necessary steps to respond,” Sony chief financial officer Nobuyuki Oneda told a news conference.

Sony, which competes with Nintendo and Microsoft Corp in video games and the likes of Sharp Corp and Matsushita in flat TVs, suffered a group operating loss of 20.83 billion yen (£93 million) in the July-September second quarter.

That compares with a restated 74.56 billion yen profit in the same quarter a year earlier. Sales rose 8.3 per cent to 1.85 trillion yen.

Nintendo, meanwhile, said its operating profit more than trebled in the fiscal first half, buoyed by its hot-selling DS handheld game device, and it stood by its annual outlook for 60 per cent profit growth.

Kyoto-based Nintendo has scored a smash hit with the DS, which allows players to give commands using a stylus instead of a key pad and has attracted game novices by offering casual and easy-to-play games.

April-September operating profit at Nintendo, known for game characters such as Mario, Donkey Kong and Pokemon, totalled 67.1 billion yen, up from 19.6 billion yen a year earlier. Sales rose 69.4 per cent to 298.82 billion yen.

Nintendo earlier this month revised up its earnings forecasts for both the April-September first half and full year to March 2007.