Recently, Sony gave a preview of its third quarter earnings that set the stage for a grim set of final figures. Those figures were released Thursday, on the same day that Nintendo unveiled the results of its sales during the third quarter. Although both companies are facing the same problems when it comes to general economic conditions, Nintendo seems set to stay in the black regardless, and it's worth taking a look at why.

The most fundamental problem that both companies face is that much of their income comes from overseas sales, and the Yen has strengthened considerably against many currencies as people flock to its relative stability. That means that all of the overseas revenue is diluted in value when it's converted to Yen on its return to the company.

Sony: trouble in diversity

This can be clearly seen in Sony's financial statement, which broke out the company's electronics operations revenue in detail. From having over �200 billion in revenue (currently about $2.2 billion) in the Q3 of 2007, the division slid to a loss of �16 billion. Nearly half of that drop, �94 billion, came from the exchange rate alone. Nintendo took a hit from the foreign exchange problem as well, but nothing nearly that severe. The company isn't breaking out quarterly figures, but is instead giving combined numbers for the first nine months of its current fiscal year. During that time, the damage from the foreign exchange rate has eaten into its profits, but only to the tune of an 18 percent year-over-year drop.

Part of Sony's problem is its diversity. For the most part, its different electronics offerings aren't mutually supportive—owning a Vaio PC doesn't seem to make anyone more likely to buy a Bravia TV or a PS3. As such, sales of nearly everything plummeted. This was especially true of its mobile phone affiliate, Sony Ericsson, which made a big contribution to the �45 billion lost by the electronics division.

The game division, all things considered, did moderately well for Sony. Sales dropped by about a third year-over-year, but the group managed to stay above water, bringing in a profit of �400 million. That's a big (97 percent) drop year-over-year, but Sony calculated how that figure would look if the Yen's value were pegged at where it started the fiscal year, and found it would actually be up by over 150 percent.

That sounds great, at least until you look at the numbers, which suggest that most of this boost comes from changes in margins and PS3 software sales, as sales of everything else were down. The flagship PS3 was down nine percent year-over-year, the PSP dropped slightly more, while the PS2 was clearly slouching towards end-of-life territory, with sales plunging by over half. Its software sales followed it with a similar plunge, and PSP software sales were in line with its drop, as well. The only win? PS3 software sales, which rose by over 50 percent.

Nintendo: strength in focus

Nintendo, as we mentioned, only provides its results in terms of the total of the fiscal year, of which the holiday season constituted the third quarter. Some quick math with the previous quarter's results, however, yield some pretty impressive numbers. Net sales were �700 billion, yielding a profit of �68 billion, or about $750 million. It's not all good news, though—as of its last quarterly report, net income was running about �10 billion ahead of the previous year; now they're running about �45 billion behind, even though operating income is up substantially.

In terms of actual hardware, the DS moved just shy of 12 million units over the holidays, while the Wii picked up another 10.4 million in sales. That leaves the Wii comfortably ahead of where it was this time last year, and just shy of having 45 million units sold in its lifetime. That huge installed base is driving software sales. With three fiscal quarters down, software sales were nearly double what they were at this point last year, and over 82 million units of software were sold in the holiday quarter. All told, software sales accounted for about �250 billion in revenue.

It's clear that Nintendo has guessed right in designing a console that can appeal to the mass market, one that it acknowledges in its earnings statement: "Nintendo will continue to pursue expansion of the gaming audience and provide products that offer unique entertainment that puts smiles on the faces of people of all ages and genders." Its focus on that market has helped it avoid having its success in gaming diluted by the broad losses in many divisions that are plaguing Sony, despite the fact that both companies are facing a similar economic problem.