From The New York Times - June 27, 2008
TOKYO— The Sony Corporation said Thursday that it would make a strong move into networked electronics and video download services and aim for the top spot in liquid-crystal display TVs as the company seeks to make the most of its hardware and software assets.
The company, which sells PlayStation games and Vaio PCs, said it would aim to double revenue from the fast-growing markets of Brazil, China, India and Russia, to 2 trillion yen ($18.7 billion) and invest 1.8 trillion yen in businesses and technologies as part of a three-year strategy to March 2011.
“So much more opportunities exist outside the core markets of Japan, North America and Europe,” Sony’s chief executive, Howard Stringer, told a news conference.
Sony wants to lift return on equity to 10 percent from an average of about 6 percent over the last three years, and reach the 5 percent operating profit margin that eluded it in a previous plan, when it reached 4.2 percent in the year ended in March.
“We believe a 5 percent operating margin represents a baseline to continue to lead and innovate,” said Mr. Stringer, the first non-Japanese top executive at Sony. “This is what’s considered to be the minimum, acceptable level going forward.”
Sony’s current return on equity is low compared with global rivals like the Samsung Electronics Company of South Korea, which reaches 14 percent, and Philips Electronics, which registers 23 percent, according to Reuters data.
“That target is a sign of Sony’s sense of crisis that it could really become a takeover target if it doesn’t lift its R.O.E. to at least over 10 percent,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
Sony trails Samsung in the liquid-crystal display TV market, while locked in a three-way battle with Microsoft and Nintendo in the global video game industry.
As part of its move into networked electronics and video distribution, Sony, which owns Sony Pictures, will start a video distribution service on its PlayStation Network starting this summer, playing catch-up with Apple.
The company plans to broaden the online video distribution service to other crucial products, potentially including Bravia flat TVs, by March 2011, and make 90 percent of its electronics product categories network-enabled and wireless-capable.
Apple and its iPod dominate the portable music player market, which Sony created nearly three decades ago with Walkman. The Japanese electronics maker also has been struggling in Apple’s shadow in music and video distribution service.
Of the planned 1.8 trillion yen it aims to invest over the next three years, about half would go to its component and semiconductor operations — which include image sensors, batteries, display devices and Blu-ray disc-related parts.
Sony said it would aim to bring its TV business back to profitability in the year to March 2009 by cutting production costs, and strive to be No. 1 in the L.C.D. TV market in three years.
The company said in February it would take a one-third stake in Sharp’s 380-billion-yen L.C.D. panel plant set for completion by March 2010, securing a major panel supply source on top of its L.C.D. venture with Samsung.
The flat TV and video game operations were Sony’s two major earnings drags last year, diminishing profits earned by its Cyber-shot digital camera and Handycam camcorder businesses.
Sony is also aiming to make its game business profitable this year.
The article does not mention their OLED technology.
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