TOKYO (Reuters) - Sony Corp (6758.T) pushed back an elusive profit margin target to March 2013, after narrowly failing to meet the goal last year, but it aims to make its video game and TV operations profitable next year.
Sony’s TV business is in its sixth straight year of losses as it struggles to compete with South Korean rivals such as Samsung Electronics Co Ltd (005930.KS), and analysts said it would be difficult for the unit to turn profitable soon.
The New York-trade shares of Sony fell more than 4 percent to $27.11 in early Thursday trade. Sony’s Tokyo-listed shares had fallen 2.2 percent ahead of its announcement.
“It will be quite a challenge for Sony to turn its TV business profitable next year. Price declines are canceling their cost cut efforts,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co.
“On 3D TVs, we just have to wait and see if it will come up with the kind of products that excite consumers ... I don’t think many people were convinced enough today to go and buy Sony shares tomorrow.”
Sony plans to introduce 3D TVs next year and aims for more than 1 trillion yen ($11.24 billion) in sales of 3D-related products in the year ending March 2013.
The Japanese company’s PlayStation 3 game consoles can become 3D-compatible by simply updating its software via the Internet, Sony said.
Sony, which also makes Cyber-shot digital cameras, pushed back its target for an operating profit margin of 5 percent to March 2013. Chief Executive Howard Stringer had originally set the target in 2005 for the financial year to March 2008, but plans for recovery were waylaid by the economic slowdown.
Sony plans to launch a wide range of network-capable TVs, Blu-ray players and electronic book readers, and introduce a new online service to distribute movies, music, books and games to those machines.
Sony plans to boost such online sales to 300 billion yen by the year ending March 2013, up from an estimated 50 billion yen this year. It already offers video game titles online to PlayStation 3 and PlayStation Portable users.
“When you tie innovative new hardware together with compelling content network services and common user interface across products, you’ve created a unique user experience that can differentiate Sony from the competition,” Stringer said.
Sony plans to enter the market for lithium-ion batteries for use in cars at some point and would work to grab 40 percent market share in 2012/13 for its electronic reading devices, challenging Amazon’s (AMZN.O) Kindle.
It plans to cut 330 billion yen in costs this business year to March 2010, and has already carried out about 80 percent of the targeted reduction in the first half through September.
“Sony’s internal cohesion has reached the point where they’ve been able to deliver on promises to restructure and also set forward a new product strategy,” Mitsubishi UFJ Securities analyst Masahiko Ishino wrote in a report.
“But there are still many high hurdles left,” such as the ability to really supply strong and innovative products.
In an effort to improve profit at its TV operations, Sony plans to have 40 percent of its LCD TVs assembled by outside manufacturers in the next business year starting April 2010, up from 20 percent this year.
It aims for a 20 percent share in the global LCD TV market in unit terms in the year to March 2013. That compares with an 8.7 percent share it held in July-September, according to data from research firm DisplaySearch.
Additional reporting by Tiffany Wu in New York; Editing by Will Waterman and Derek Caney