Sony Says Only 'Natural Disaster' Could Keep TVs in Red This Year

Only a "natural disaster" could keep Sony Corp's TV division from returning to profit this year, the head of the newly independent business said on Monday, after a decade in the red and repeated missed promises of a turnaround.

Masashi Imamura told a media round table that the TV business, which will become a separate subsidiary of Sony Corp on July 1, could better respond to market fluctuations after taking a scalpel to fixed costs last year and tackling expenses at distribution companies next.

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The TV business, which has racked up around 790 billion yen of losses over the past 10 years, has been one of the main contributors to persistent losses in Sony's flagship electronics division, which Chief Executive Kazuo Hirai has promised to restore to profit.

Sony has forecast an 18.5 percent rise in TV sales to 16 million units this year from 13.5 million units a year ago, drawing scepticism from analysts who said that was well above the industry's average growth forecast.

Imamura said the sales target was achievable and was confident Sony could make a profit even in a worst-case scenario. He added it could now absorb the sort of fluctuations in emerging market currencies that were partly to blame for last year's loss.

Sony says splitting off its TV division will boost transparency and accountability. Some analysts have speculated the move was a first step towards selling it off completely, which the company has denied.

Hirai said at a corporate strategy meeting last month that the company had not ruled out an equity tie-up for the TV business, which is to be known as Sony Visual Products Inc, although nothing had been decided on the matter.

Oled Tvs
Sony's share of the TV market has been battered over the past 10 years as South Korean rivals Samsung Electronics Co Ltd and LG Electronics caught up in technology while competing fiercely on price.

Sony and its rivals are focusing on ultra high definition '4K' models as a potential new source of profit, but while Sony is sticking with liquid-crystal displays, both Korean companies are also promoting curved-screen sets using organic light-emitting diode (OLED) technology.

Recent media reports have suggested LG Electronics' display arm may supply Sony and compatriot Panasonic Corp with OLED TV panels as it looks to promote adoption of the technology. LG Display Co Ltd said last week it would start production on a new OLED TV line from July that would increase total capacity for large panels to 34,000 units per month.

"Whether LG Display is our supplier or not, if an OLED panel matched our product strategy then I can't say we wouldn't use the technology," Imamura said. "Right now we have no plans to invest in any OLED or LCD factory."

While Sony was one of the original pioneers of OLED technology, it does not currently use it for any consumer gadgets and has not announced any plans to do so.

Imamura, the longest-serving of Sony's six TV chiefs over the past 10 years with almost three years' tenure, said he believed the TV market was more stable and had more opportunity than other consumer gadgets such as PCs.

(Also Read: Samsung starts selling 110-inch ultra HD TV for $150,000 in South Korea)

"I think the market is stable at around 200 million, which is a huge opportunity. The PC has changed into the tablet, digital cameras have turned into smartphones ... but customers still buy a new TV every five years," he said.

Imamura said Sony would begin next year to sell top-end Bravia TVs fitted with Google Inc's upcoming 'L' Android operating system, announced last week at the U.S. company's I/O developers' conference in San Francisco.

Sony's shares are down 8 percent so far this year, in line with the benchmark Nikkei average's 7 percent drop. On Monday, they ended 0.2 percent higher at 1,682 yen, compared with the Nikkei's 0.4 percent rise.

© Thomson Reuters 2014