Sony sees 5-fold jump in profit, below consensus
TOKYO (Reuters) - Sony Corp forecast a five-fold jump in annual operating profit as the Japanese electronics maker expands flat TV sales and launches 3D-capable video games, though the outlook was short of market expectations.
Sony has shed jobs, shut factories and cut procurement costs to better compete with global rivals such as Samsung Electronics Co in TVs and Apple Inc in portable music, and now hopes to reap the fruit of its restructuring.
The world's No.2 LCD TV maker behind Samsung has vowed to turn its television and game operations profitable this year by slashing production costs and boosting unit sales, and helped by the launch of 3D TVs and 3D-ready games in June.
Chief Executive Howard Stringer believes Sony is best positioned to benefit from growing consumer interest in 3D images given its wide business portfolio spread across electronics and entertainment that includes movie studios, theatre-use projectors and professional-grade video cameras.
A firmer Korean currency could also help it compete with South Korean exporters.
"Sony is really pushing hard to boost TV sales, and with the Korean won getting stronger against the yen it's going to be a real threat to Korean makers like Samsung and LG this year," said Baek Jong-Suk, analyst at Hyundai Securities in Seoul.
Sony, which vies with Canon Inc in digital cameras and Nintendo Co and Microsoft Corp in games, expects operating profit of 160 billion yen (1.15 billion pounds) in the year to March 2011, up from a 31.8 billion yen profit last year.
The forecast fell short of a consensus for a 209.3 billion yen profit in a poll of 21 analysts by Thomson Reuters I/B/E/S.
Sony said that it had factored in a 40 billion yen negative impact from currency rates and another 40 billion yen for its finance division this financial year, reflecting the current financial market turmoil in Europe.
"If the Greek issue continues to affect the European economy and currency for a long time, that would be a negative factor," Sony Chief Financial Officer Nobuyuki Oneda told a news conference.
At the same time Oneda said Sony was not overly concerned about Apple's successful launch of the iPad computer tablet, seen as a threat to the growth of Sony's electronic book reader.
"We realise Apple's iPad is selling very well, but we believe there are still customers who want to buy e-readers like ours which are light, easy to read and comparatively cheap," he said.
For the three months ended March 31, Sony posted an operating loss of 56.0 billion yen, against a loss of 294.3 billion yen in the same quarter a year earlier.
The quarterly result came as little surprise after the company this week updated its earnings outlook for the past business year.
Shares in Sony closed up 4.1 percent at 3,165 yen ahead of the announcement, outperforming a 2.4 percent rise in the Tokyo stock market's electrical machinery index. Sony's stock has gained 18.5 percent in the year to date, double the gain in the subindex.
(Reporting by Kiyoshi Takenaka; Editing by Anshuman Daga and Michael Watson)
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