SONY confirmed yesterday that its growing number of technological woes would have a big impact on its profits, denting the otherwise strong earnings recovery engineered by Sir Howard Stringer.

Amid an embarrassing run of technical blunders, price cuts to key products and battery recalls, the iconic electronics giant reduced its projected group operating profits for the full year from 130 billion yen (£587 million) to 50 billion yen.

The group said that it had assumed charges of 51 billion yen to cover the soaring costs of recalling Sony-made lithium-ion batteries. Profits were previously on course for a 5.2 per cent rise over the financial year, driven by the success of the group’s digital camera and LCD television divisions.

The company has suffered a grim series of setbacks recently, including delays to its showcase games console, the PlayStation 3. On top of losses resulting from the four-month delay to the European launch of the PS3, the technical problems that have dogged the machine will have a knock-on effect on other parts of the Sony empire.

Like its previous consoles, the PS3 was expected to be loss-making in its initial stages, but a hastily announced pre-launch price cut of 20 per cent will significantly exaggerate the effect. The price cut was made in response to a console launch by Nintendo, whose Wii will cost half of what the PS3 does. The company also said that its PlayStation Portable handheld gaming machine was still generating higher than expected losses for the games division.

But worse and more immediate financial havoc has been caused by the spiralling problem with the laptop batteries. The threat, raised earlier in the week by Toshiba, that PC-makers affected by the recalls may sue Sony for damages, could see the cost of the debacle grow further. Sony said that its 51 billion yen estimate for the damage from the battery recall did not assume additional costs relating to potential payments in damages.

Several analysts believe the eventual figure could be much higher — possibly rising to more than 90 per cent of the 70 billion yen annual sales from the battery division.

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