Sony sees return to profit after record $5.7 billion annual loss

Sony shares, valued at below $15.5 billion, this week slipped to a quarter century low, a sign of how the Walkman and PlayStation maker has lost its innovative edge and fallen behind rivals Apple and Samsung Electronics.

Under new CEO Kazuo Hirai, Sony is slashing costs and jobs in a bid to turnaround its struggling TV unit. While considering partnerships to help Sony compete better in TVs, Hirai is looking to cameras, gaming and smartphones to spur growth.

Sony expects operating profit of 180 billion yen in the year to next March, compared with a consensus estimate of 173 billion yen among 18 analysts surveyed by Thomson Reuters I/B/E/S. In the year just ended, Sony posted an operating loss of 67.3 billion yen. It forecast a full-year net profit of 30 billion yen.

Sony expects sales of liquid crystal TVs to fall 11 percent to 17.5 million this business year, and predicted sales of its PlayStation games console would also slip 11 percent, to 16 million. It forecast sales of its new Vita handheld games console would reach 1.8 million this year.

Sony's January-March operating loss of 1.4 billion yen was narrower than the average 10 billion yen loss estimated by five analysts.

At a briefing last month, Hirai sketched out a future driven by mobile devices such as the Xperia smartphones, gaming and cameras, as well as medical devices and electric car batteries, along with big cost cuts in a TV business that has lost more than $10 billion in 8 years.

Sony is cutting 10,000 jobs - 6 percent of its global workforce - and will take a 75 billion yen restructuring charge this business year. The company underwent two rounds of layoffs during previous CEO Howard Stringer's six-year tenure.

"Sony is looking to double its smartphone market share, but we saw no clear strategy for differentiation," Goldman Sachs analyst, Takashi Watanabe said in a report last month.

Little more than a month into his job as CEO, Hirai has set a target for group sales of 8.5 trillion yen in two years, with an operating margin of more than 5 percent. "This is our only chance to change," he told an April 12 news conference.

He has yet to spell out just how Sony will achieve those mid-term targets, and investors are concerned about Sony's prospects as consumers flock to gadgets made by Samsung and Apple. Since the start of the year, Sony shares have dropped 12 percent, while the benchmark Nikkei 225 index has gained nearly 7 percent.