Sony sees 25-fold profit jump by 2018 through videogames, sensors

Sony aims to boost its operating profit 25-fold within three years by focusing on its more profitable image sensors, videogame and entertainment businesses, its chief executive said on Wednesday. Outlining his strategy for the loss-making Japanese consumer electronics icon to 2018, CEO Kazuo Hirai said Sony wanted to give its subsidiaries more autonomy in decision making to help drive growth. He also did not rule out an exit from smartphones and TVs, sectors in which Sony has been battered by cut-throat competition from cheaper Asian rivals and industry leaders like Apple and Samsung Electronics. “If our initial mid-term corporate strategy was about reforms, the second mid-term strategy starting from the next business year will be about generating profit and investing for growth,” Hirai said in the strategy briefing. Sony would use return on equity (ROE) as its main yardstick for performance, setting a target of more than 10 percent by the end of the business plan to March 2018, Hirai added. He also targeted an operating profit of at least 500 billion yen ($4.20 billion) for 2017/18, a jump from the 20 billion yen Sony forecast for the financial year ending March 31. Sony shares have risen more than 80 percent over the past year as investors applauded its restructuring, which accelerated since Hirai appointed Kenichiro Yoshida as his chief strategy officer in late 2013. Both executives have been honing Sony’s focus on niche markets where sales have been strong, such as the PlayStation videogame network and the camera image sensors, while cutting back on loss-making products including TVs and smartphones. Earlier this month, Sony forecast an operating profit instead of a loss for the financial year ending March 31. But it still expects to book its sixth net loss in seven years in 2014/15, albeit a smaller amount than previously estimated. Sony’s strategy revamp comes as cut-throat competition squeezes some of its Japanese peers into losses and restructurings. While Panasonic’s shifting focus on automobile-related technology and quirky household appliances has helped it bounce back, Sharp Corp remains mired in losses with its concentration on display panels now working against it amid pricing pressure in the smartphone industry. Reuters