Sony cuts back profit forecasts

A price cut last year helped to lift PlayStation 3 sales

Sony has cut its profit forecast by about 9% - saying falling stock markets have dented its investments while the strong yen is hitting overseas sales.

It also warned the US economic slowdown could hit its sales in that market.

The Japanese firm said it expected to make about 410bn yen (£305m; $608bn) in the year to March, down from its earlier prediction of 450bn yen.

But in more upbeat news, Sony added that Playstation 3 sales had helped its video games arm to reach profitability.

US worries

The PS3 has been battling Nintendo's Wii and Microsoft's Xbox 360 for sales.

FROM DOT.LIFE BLOG I don't believe titles like Haze or Metal Gear Solid 4 will shift that many more PS3s Darren Waters, Technology editor, BBC News website Read more from the blog

But Sony's games division made its first profit in two years after it cut costs and boosted demand by lowering prices.

Sony said there had also been strong demand for its digital cameras and Vaio personal computers during the Christmas period.

"The game division turning into the black is a positive," said Norinchukin Zenkyoren Asset Management senior fund manager, Takeshi Osawa.

"But the US economic outlook is a cause of concern for its consumer electronics business."

Sony said that, while it had not yet seen any signs of weakening demand in the US as a result of problems in the mortgage market, it "expects there to be a gradual impact from here on".