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

Sony CEO Kazuo Hirai targeted an operating profit of at least 500 billion yen ($4.20 billion) for 2017/18. He also did not rule out an exit from smartphones and TVs.

Ritsuko Ando | February 18, 2015 | Updated 17:06 IST
Sony sees 25-fold jump in profit by 2018
(Photo: Reuters)

Sony, the Japanese technology conglomerate, 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 consumer electronics company to 2018, CEO Kazuo Hirai said Sony wanted to give its subsidiaries more autonomy in decision making to help drive growth.

Hirai 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," the CEO said in the strategy briefing.

Sony would use return on equity (ROE) as its main yardstick for performance, setting a target of over 10 per cent by the end of the business plan to March 2018, Hirai added.

The Sony chief also targeted an operating profit of at least 500 billion yen ($4.20 billion) for 2017/18, a jump from the 20 billion yen the conglomerate forecast for the financial year ending March 31, 2015.

Sony shares have risen more than 80 per cent 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 in February, Sony forecast an operating profit instead of a loss for FY15. 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)

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