Sony sees return to profit, aims to halve TV losses

Thu May 10, 2012 7:00am EDT
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By Tim Kelly

TOKYO (Reuters) - Sony Corp predicted a return to profit this year as it looks to halve the losses in its TV business that pushed the Japanese consumer electronics giant to a record loss of $5.74 billion in the year just ended.

Sony shares, valued at around $15 billion or just 3 percent of rival Apple Inc, this week slipped to a quarter century low, a sign of how the Walkman and PlayStation maker has lost its innovative edge and fallen behind Apple and Samsung Electronics.

Under new CEO Kazuo Hirai, Sony is slashing costs - 10,000 jobs, or 6 percent of the global workforce, will go - in a bid to turn around its struggling TV unit. At a briefing last month, Hirai sketched a future driven by mobile devices such as the Xperia smartphone, gaming and cameras, as well as medical devices and electric car batteries, along with big cost cuts in the TV business that has lost more than $12 billion in 9 years.

The company said on Thursday it expects to sell more than 33 million smartphones this year, up from 22.5 million last year. In preparation for that mobile push, Sony last year bought out Ericsson from a phone joint venture to integrate the business with its other consumer electronics units.

"In handsets, without big innovations, Sony will still be a second-tier smartphone market player," said SR Kwon, an industry analyst at Dongbu Securities in Seoul. "I'm just not impressed by Sony smartphones."

"Will Sony get much better as time goes by? I'm not that optimistic. Currency is not the only problem, the bigger problem is that Sony has failed to catch up with consumer trends in TVs and handsets."

Sony expects an operating profit of 180 billion yen in the year to next March, slightly ahead of market estimates, but a rebound from a loss of 67.3 billion yen in the year just ended. It forecast a full-year net profit of 30 billion yen.

"The operating profit forecast isn't far off the level seen two years ago ... This suggests we're on a recovery trend and last year was definitely the bottom," said Kenichi Hirano, operating officer at Tachibana Securities in Tokyo. "But I think not everyone in the market is convinced of this, especially since the company lacks a solid plan to turn around its TV business."   Continued...

A Sony logo is seen as customers look at Sony's digital cameras at an electronic shop in Tokyo May 10, 2012. REUTERS/Kim Kyung-Hoon