Sony (NYSE:SNE) had its share of challenges in 2006, and its latest quarter shows that things still aren't exactly easy for this company that's been long trying for a turnaround. Take the hit it took to profitability on the long-awaited launch of PlayStation 3.

Sony's third-quarter profit decreased 5% to $1.3 billion, or $1.28 per share. Much of the hit was attributed to the high costs of launching the PlayStation 3 console -- the gaming segment at Sony posted a loss in the quarter. Overall sales increased 9.2% to $21.9 billion. Some elements also jump out, such as a 52.9% increase in long-term debt and free cash flow at a negative $2.13 billion. (For a full run-down of the numbers, see our related Fool by Numbers article.) Sony also increased its full-year financial outlook, but bear in mind that that is due to a weaker yen.

Sony, of course, is a huge conglomerate involved in many different businesses. Its electronics segment posted a 16.9% increase in revenues, helped along by success of its Bravia LCD televisions and Sony's Cyber-shot digital cameras. Its film segment also did well, with a 46.8% increase in revenue attributable to DVD sales of films such as The Da Vinci Code and Talladega Nights: The Ballad of Ricky Bobby. Its music division, Sony BMG, saw sales fall 1.6% on slowing compact-disc sales (no secret in the music industry).

The story everybody's interested in, of course, is the loss at the gaming division, given the long-anticipated launch of PlayStation 3, its competition with Microsoft's (NASDAQ:MSFT) Xbox 360, and the new -- and exciting -- challenger/underdog in the space, Nintendo's Wii. Sony cited the fact that it cut the price on PS3 in Japan for the loss, but an AP article quotes a Sony vice president who said advertising and shipping costs may continue to hinder profits next quarter and drag down the current fiscal year, which ends this March.

Many people wonder whether Sony is charging too much for the high-end console (price cuts in Japan notwithstanding), and of course, Sony manufactures the consoles, which include high-end technology like Blu-ray, at a significant loss to begin with. I've also heard rumblings that the console is difficult and expensive to develop games for, and that the PS3 isn't jumping off the shelves at retailers as readily as one might expect. The AP also reported that Sony's mulling lowering the retail price of the console other than just in Japan.

And let's not forget the Wii -- a more reasonably priced system for non-hardcore gamers, which one can only imagine is a large, underserved market. It looks as though the Wii has been a success so far, anyway. (Not to mention it got some pop-culture cred early in the game. Last season, South Park's Eric Cartman was willing to freeze himself -- with hilarious results -- rather than contain himself for a couple of more weeks waiting for the Wii's launch.)

Given the quarter's tidings, investors might want to ponder the economics associated with the PS3, as well as the idea that despite its well-known and popular brand and state-of-the-art features, maybe it's not bulletproof, especially with a price many argue is too steep for many less avid fans' wallets. There are still a lot of questions -- and Sony's still got some work to do as it turns things around.

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Alyce Lomax does not own shares of any of the companies mentioned.