Sony aims for profitability in TV and video game businesses by next March

Enlarge Photo Sony aims for profitability in TV and video game businesses by next March

Thu, Jun 26 04:51 PM

TOKYO (AP) _ Sony outlined its strategy for growth Thursday geared at regaining its lead in TVs, wiping out the red ink in video games and rolling out movie services to woo Net-savvy consumers. Sony Chief Executive Howard Stringer vowed the company will become profitable in its money-losing TV and game businesses during this fiscal year ending March 2009, and beef up networking gadgets, making sure 90 percent of Sony's electronics products connect to the Net by wireless by March 2011.

Stringer said Sony has achieved recovery since 2005 by exiting or downsizing 15 product categories, reducing 10,000 global workers and shutting down 11 manufacturing sites. When Stringer, a Welsh-born American, became the first foreigner to head Sony, the manufacturer of the Walkman portable player and PlayStation 3 game console had been battered by cheaper rivals, and fallen behind in key products such as digital music players to innovative makers like Apple Inc.

"Our job, however, is not complete," he said in outlining the strategy for the Japanese electronics and entertainment company at its Tokyo headquarters. "We must complete our transformation.

" Stringer said Sony must now come up with better software and services in its products that match its longtime reputation for hardware gadgets and entertainment content. In the autumn, Sony will start delivering in the U.S. feature films and TV shows as streaming video directly to Bravia TVs, without using satellite or cable distribution systems, but through the Internet, an industry first, he said.

That service will start with "Hancock" from Sony Pictures, which is becoming available before it comes out in DVDs, Stringer said. A movie download service will come for the PlayStation 3 home console in the summer in the U.S., said Kazuo Hirai, who heads Sony Corp.

's video game unit. The service will be offered in Japan and Europe at later dates, although details weren't available until next month.

"Please expect more from our evolving PlayStation business," Hirai told reporters. Koya Tabata, electronics analyst at Credit Suisse in Tokyo, said it was good news Sony will be linking its products by network, noting that Sony products, including mobile phones, TVs and game machines, total 200 million globally about double Apple Inc.

's iPod players and other gadgets combined. "There is potential for growth because of the scale of Sony's platform.

" he said. "But I'm assessing it as 'neutral' so far.

" He said more time was needed to assess how the strategy will play out, although networking TVs and other gadgets have huge revenue-grossing possibilities. Sony is widely viewed as having erred in not pursuing flat-panel TVs soon enough, and sticking to proprietary software with its gadgets, and its earnings have been battered in recent years.

But it posted its record profit of 369.4 billion yen (US$3.5 billion) for the fiscal year ended this March. Sony has now become No.

1 in global share in liquid-crystal display TVs, thanks to the joint-venture in panel production Sony has with South Korean rival Samsung Electronics Co., said Sony President Ryoji Chubachi, who heads the company's electronics operations.

Sony will better focus on core businesses, which the executives will now include its gaming business, as well as personal computers, Blu-ray disc products, computer chips, LCD TVs, digital cameras and mobile phones, Chubachi said. Sony is investing 1.8 trillion yen (US$16.7 billion) over the next three years for future technology, mostly to beef up those core areas, executives said.

Sony said it hopes to double annual sales from Brazil, Russia, India and China overall to 2 trillion yen (US$18.5 billion) by March 2011. "Sony believes that the largest growth opportunities exist outside its traditional markets of Japan, North America and Europe," it said in a statement.

Stringer said Sony continues to be focused on profitability, setting a target of 5 percent operating profitability margin. "When Sony is united, Sony is unbeatable," he said.

Sony shares gained 2.9 percent to 5,060 yen (US$46.9) in Tokyo. Sony made its announcements shortly after trading ended on the Tokyo Stock Exchange.

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