Sony Shares Rise on Report Profit to Exceed Estimates (Update3)

April 13 (Bloomberg) -- Shares of Sony Corp., the world's second-largest consumer electronics maker, rose to a two-month high after the Nikkei reported operating profit this fiscal year will beat analysts' estimates on Bravia television sales.

The stock gained 2.7 percent to 6,510 yen at the close on the Tokyo Stock Exchange, after rising to a five-year high. Operating profit for the year ending March 31, 2008, will probably reach 400 billion yen ($3.4 billion), exceeding estimates for 350 billion yen, the newspaper said today, without saying where it obtained the information.

``The Nikkei numbers are just estimates and we can't comment on it,'' said Mami Imada, a spokeswoman for Tokyo-based Sony. Sony is scheduled to report fiscal 2006 earnings on May 16. The company in January said it expected operating profit to gain 20 percent to 60 billion yen.

Chief Executive Officer Howard Stringer targets an operating profit margin of 5 percent by March 2008, about double the current margin. Tokyo-based Sony confirmed today that it will only sell a more expensive version of its PlayStation 3 game console in North America, a strategy it adopted for the European market to bolster margins.

``Profit margin will probably exceed 5 percent if Sony doesn't lower the price of PlayStation 3,'' Hitoshi Kuriyama, an analyst at Merrill Lynch & Co. wrote in a report dated yesterday. He rates the stock a ``buy.''

Shares of Sony gained 28 percent this year, compared with a 0.8 percent advance in the Nikkei 225 Stock Average.

Sony will stop selling the 20-gigabyte PlayStation 3 model in North America, and will only offer the 60-gigabyte version, said Satoshi Fukuoka, a Sony Computer Entertainment Inc. spokesman in Tokyo, confirming a separate Nikkei report.

`Consumer Needs'

``It's in line with our strategy as we had planed to choose models based on consumer needs,'' Fukuoka said. The larger model, which retails for $599 in the U.S. and is $100 more expensive than the smaller version, accounts for about 90 percent of sales, he said.

The company is also considering introducing the model with a bigger hard disk, Fukuoka said, without providing details.

Sony also denied a Nikkei report that it aims to ship 10 million PlayStation 3 units in the year to March 2008, a 66 percent increase from the projected 6 million units for the fiscal year just ended.

To contact the reporters on this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Yoshinori Eki in Tokyo at yeki@bloomberg.net.

To contact the editor responsible for this story: Teo Chian Wei at cwteo@bloomberg.net