Sony Q1 profit down on mobiles, Matsushita up

By Kiyoshi Takenaka and Nathan Layne

TOKYO (Reuters) - Sony Corp (6758.T) posted a bigger-than-expected 47 percent fall in quarterly profit and cut its outlook, hurt by its struggling mobile phone joint venture with Sweden's Ericsson (ERICb.ST), while rival Matsushita (6752.T) nearly doubled its profit on rising flat TV sales.

Sony lowered its group net profit forecast for the year to March by 17 percent, citing the slump at Sony Ericsson and weakening prospects for its electronics division as rivals try to undercut its Cyber-shot digital cameras and Vaio PCs on price.

"On digital cameras and camcorders, growth in developed markets such as Europe and the United States slowed and competition intensified, resulting in smaller profits," Sony Senior Vice President Naofumi Hara told a news conference.

Matsushita Electric Industrial Co Ltd, the maker of Panasonic products, in contrast, kept its outlook above market expectations as it cashes in on strong demand for its Viera flat TVs.

Asked about media reports that Sony is in talks to buy the 50 percent it does not own in Sony BMG Music Entertainment from Germany's Bertelsmann BERT.UL, Sony Chief Financial Officer Nobuyuki Oneda said nothing concrete has been decided, indicating the two are negotiating on Sony BMG stakes.

The Financial Times reported in June that Bertelsmann is seeking $1.2 billion to $1.5 billion to pull out of Sony BMG, while the Nikkei business said on Tuesday the sale price for the 50 percent stake is expected to be in excess of 100 billion yen ($931 million).

SEVERE STATE

The U.S. economic slowdown, higher raw materials prices and a firmer yen have been slicing into the profitability of Japanese exporters. But analysts said Sony is being hit particularly hard.