Sony: PSN security breach cleanup to cost $171 million

By on May 23, 2011, 12:56 PM

It's been a dire year for Sony with the combined disruption from the Japanese earthquake and the damage caused by the PSN hack. The company is due to release a financial report on Thursday, but on a preliminary financial update for its fiscal year 2010, which ended on March 31, Sony noted it now expects to post a $3.1 billion loss instead of the $857 million in profits forecasted back in February.

Most of the loss is due to charges associated with U.S. GAAP (generally accepted accounting practices) rules.

The earthquake and tsunami occurred just three weeks before the end of the financial year and thus didn't have a large impact on the company's global financial performance for fiscal 2010. According to reports, Sony estimates a ¥22 billion ($269 million) drop in sales and ¥17 billion ($208 million) in quake-related costs in the now-finished period.

Things aren't looking too hot for the next twelve months, though. For the fiscal year to end on March 31, 2012 the company expects profits to be off by a whopping ¥150 billion ($1.8 billion), most of it coming from idling factories in Japan and rebuilding capacity in the wake of the natural disaster that hit the country.

Having occurred in late April, the PlayStation Network attack and subsequent data theft fall outside the just-finished 2010 period, but the company nonetheless addressed the impact of the hack saying it will cost about ¥14 billion ($171 million) and show up in the next fiscal year's results. That figure contains all of the investigation, cleanup and insurance needed to resolve the issue, as well as the updates made to the network to prevent further occurrences, but it doesn't include costs associated with lawsuits made against the company, as the outcome is hard to predict.

Furthermore, those losses could become even larger if identify theft or credit card fraud is detected as a result of the PSN security breach -- which hasn't been the case so far. The company is expected to provide more details later this week. Despite the setbacks the company recently said it's still on track to launch the NGP later this year.

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