Sony set to book loss, rivals to fare better
TOKYO (Reuters) - Sony Corp (6758.T) is set to post a fourth straight quarter of losses this week, hit by weakness in its cellphone and video game operations, but other big-name rivals are expected to have managed a moderate earnings recovery.
Sharp Corp (6753.T) the world's No.4 LCD TV maker and a major display panel supplier, benefitted from brisk demand for LCD panels in the latest quarter, while Panasonic (6752.T) saw strong demand for its refrigerators and other household appliances.
Cost cuts and healthy demand from emerging markets will also help boost the bottom line at Sharp and Panasonic.
Sony's red ink is likely to have expanded from the previous quarter due to appraisal losses on game console inventory but analysts expect it to have cut losses at its flat TV business by focusing on profitability rather than sales growth -- a shift that may cap long-term growth potential.
"Sony and Sharp have both tried to improve profitability at their TV operations at the expense of market share. That was somewhat inevitable after posting huge losses last year," said Daiwa Securities SMBC analyst Kazuharu Miura.
"In the long term, that won't work. They will eventually have to again seek ways to drive both sales and profit without incurring too much price competition from South Korean makers. This, of course, is easy to say, but difficult to do."
Sony's global market share in LCD TVs fell to 14.7 percent in April-June from 16.5 percent a year earlier, while South Korea's LG Electronics Inc (066570.KS) lifted its share to 11.6 percent from 9.4 percent, according to research firm DisplaySearch.
Sharp will likely post its first operating profit in four quarters and Panasonic is set for its first profit in three quarters.
With the outlook for the year-end shopping season unclear, Sony, Panasonic and Sharp are unlikely to change their annual earnings outlooks. Sony is forecasting a loss, Sharp has projected a swing to profit while Panasonic expects profit to grow.
GAME CHANGER
Sony last month launched a lower-priced PlayStation 3 to better compete with Nintendo Co Ltd's (7974.OS) Wii and Microsoft Corp's (MSFT.O) Xbox 360, likely resulting in appraisal losses on its hardware inventory.
But, on a brighter note, the price cut helped the PS3 become the top-selling game console for the first time in the United States in September.
"This is a big change," Rakuten Securities analyst Yasuo Imanaka said. "Nintendo is now losing steam while Sony's game operations are on the rise. Over the past two years, its hardware prices have fallen and its software lineup has become stronger."
Playstation 3 is expected to get a further boost in December when Square Enix Holdings Co (9684.T) launches the latest version of its blockbuster "Final Fantasy" role-playing game series.
Nintendo, which had dominated the global game industry until recently is likely to cut its full-year earnings outlook on a slowdown in Wii sales, analysts said. Continued...
