Game unit losses hit Sony profits

The PlayStation 3 is facing tough competition from rivals

Japanese electronics giant Sony has unveiled 5.3% a drop in profits, blaming huge losses at its game unit.

Net profits for the three months to 31 December fell to 159.9bn yen ($1.3bn; £669m) from 168.9bn yen last time.

Poor sales and high costs linked to the delayed launch of its PlayStation 3 and sluggish demand for its PlayStation Portable (PSP) weighed on profits.

Costs at its game division outweighed a recovery at Sony's electronics division driven by strong flat-screen TV sales.

Despite posting a loss for the quarter, the group raised its forecasts for the year, saying it now expected operating profits for the year to March to come in at 60bn yen - compared with previous forecasts of 50bn yen.

"As a result of the strong performance of the electronics segment during the third quarter, operating results for the segment are trending higher than anticipated at the time of our previous forecast," the company said.