Sony Raises Profit Forecast, Citing Demand for TVs, Consumer Electronics

-- Sony Corp., the world’s No.3 television maker, raised its full-year earnings forecasts after sales of TVs and game consoles helped the company to an unexpected profit last quarter.

Net income will probably be 60 billion yen ($688 million) in the year ending March 2011, compared with an earlier projection of 50 billion yen, the Tokyo-based company said in a statement today. Operating profit, or sales minus the cost of goods sold and administrative expenses, may be 180 billion yen, compared with the 160 billion yen forecast in May.

Chief Executive Officer Howard Stringer has started to focus on new products as the global economic recovery revives consumer demand. The maker of Bravia TVs in May unveiled the prototype of a set that will deliver video and music over the Internet in partnership with Google Inc. and started selling 3-D TVs in the U.S., Europe and Japan last month.

“Demand for TVs continued to be strong in China and Japan and Sony has sold its new models without cutting prices significantly,” Yasuo Nakane, a Tokyo-based analyst at Deutsche Bank AG said before the results were announced. He has a “hold” rating on the stock.

Sony added 0.1 percent to close at 2,611 yen in Tokyo trading before the announcement, narrowing its loss this year to 2.2 percent. Panasonic Corp., Sony’s closest domestic rival, has lost 19 percent, while the benchmark Nikkei 225 Stock Average has declined 8.1 percent this year. Samsung Electronics Co. has advanced 3.5 percent.

Analysts’ Estimates

The average of 22 analyst estimates compiled by Bloomberg was for net income of 67 billion yen and operating profit of 161 billion yen on 7.5 trillion yen of revenue.

First-quarter net income totaled 25.7 billion yen, compared with a 37.1 billion yen loss recorded a year earlier, Sony said. The median estimate by six analysts in a Bloomberg News survey was for a shortfall of 18 billion yen.

The Consumer Products and Devices Group, Sony’s biggest division by revenue making TVs, Cyber-shot cameras and Handycam video recorders, posted a profit of 50.1 billion yen in the three months ended June, compared with an 8.9 billion yen shortfall a year earlier, the company said. Sales at the unit rose 7 percent to 889.5 billion yen.

TV Sales Forecast

Sony kept unchanged its May projection to sell 25 million TVs and 23 million compact digital cameras this fiscal year. Sony, which aims to make its TV business profitable during the period for the first time in seven years, targets a 20 percent share of global liquid-crystal-display TV set sales in the year ending March 2013.

The Networked Products and Services Group, which handles PlayStation games, VAIO computers and Walkman media players, recorded a loss of 3.8 billion yen, narrower than the 36.7 billion yen shortfall a year earlier as sales of personal computers and PS3 consoles and software boosted revenue 32 percent, Sony said.

Sony maintained its target to sell 15 million PS3 consoles, about 196 million game titles and 8.8 million PCs.

Global shipments of LCD TVs may rise 24 percent to more than 180 million units in 2010, Austin, Texas-based researcher DisplaySearch said in March. The shipments jumped 50 percent to 40.6 million units in the quarter ended March, it said last month.

Digital Cameras

Worldwide shipments of digital cameras rose 21 percent to 641 billion yen in the first five months this year from a year earlier, according to the Camera & Imaging Products Association.

The company maintained its forecast for a 5 percent increase in annual sales to 7.6 trillion yen. It kept unchanged its assumptions for the yen’s exchange rate to the dollar at 90 yen and revised the rate to the euro to 110 yen from 125 yen for the nine months from July 1.

Japan’s largest exporter of TVs loses about 7 billion yen of annual operating profit for every 1 yen decline in the value of the euro and 2 billion yen for every 1 yen the dollar weakens.

The yen gained 17 percent against the euro so far this year and 6.6 percent to the dollar. A stronger yen damps the value of overseas earnings at a Japanese company when repatriated.

To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net.

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