Sony bid to revive electronics to hinge on smartphones

The company forecasts smartphone sales to rise more than one-fourth to 42 mn in the year to next March

Sony Corp's bid for revival as a consumer electronics maker this business year will hinge on the fortunes of its latest smartphones, as it struggles with shrinking sales of its TVs, digital cameras and game consoles.

With consumer spending converging on Apple Inc's iPads and Samsung Electronics Co's Galaxy phones, Sony on Thursday forecast smartphone sales to rise more than one-fourth to 42 million in the year to next March. It predicted sales of its digital cameras and Playstation consoles would contract at double-digit rates.

Its five-inch screen Xperia Z smartphone has exceeded the company's sales expectations since its launch in January, but it faces an uphill battle against Chinese rivals and Samsung and Apple.

Boosted by a weaker yen that inflated the value of its euro-denominated sales, and by the expected elimination of losses in its diminished TV unit, Sony is betting on its new smartphone to help it secure an operating profit of 230 billion yen ($2.33 billion) this business year. That compares with the average 210 billion yen profit estimated by 19 analysts surveyed by Thomson Reuters I/B/E/S before Thursday's earnings announcement.

Asset sales, movies and insurance

Sony bounded back into the black last year with a profit of 230.1 billion yen that was bolstered by earnings from the sale of office buildings in Tokyo and New York, the revaluation of stock holdings and gains from the sale of businesses including a chemical unit.

"Selling assets wasn't just about helping our balance sheet. It is part of a strategy to revamp our business portfolio," Masaru Kato, Sony's chief financial officer, told a news briefing.

Financial services - mainly its insurance subsidiary - posted an operating profit of 146 billion yen, making it the consumer electronics company's most profitable business. Movies and music combined added a further 95 billion yen to profit.

This business year, the squeeze on Sony's traditional consumer electronics gadgets is set to continue. The maker of Bravia sets forecast sales of televisions to rise to 16 million this business year with the division seen returning to profit, after a sharp drop last year to 13.5 million. It had made 19.6 million TVs in the year to March 2012.

Digital camera sales are forecast at 13.5 million this year, a 20 per cent drop, while its handheld game consoles, the PSP and PS Vita, are projected to fall nearly 30 per cent to 5 million.

Since the start of the year, Sony's shares have gained 82 per cent compared with a 37 per cent rise in the benchmark Nikkei average. Its shares fell 1.4 per cent on Thursday to close at 1,744 yen before it released its latest earnings results and forecasts.