Sony profit forecast brighter

• Image Credit: EPA
• Sony flat panel television sets on sale at an electronics store in Tokyo. Sony reported a group net loss of 260 billion yen due to the impact of the massive earthquake and tsunami.

Tokyo: Sony Corp bounced from two-month lows on expectations it might have put its troubles behind it after the electronics conglomerate said this year's operating profit would match last year's, easing worries about the impact of the March earthquake.

In its first estimate for the year to March 2012, Sony said operating profit would come in around 200 billion yen (Dh8.95 billion), prompting Macquarie to upgrade its rating on the stock to outperform from neutral. Morgan Stanley, Credit Suisse and UBS reiterated their overweight, buy or outperform ratings.

Analysts said Sony had provided markets with a realistic view of the impact of the quake and a PlayStation network hacking incident, both of which had weighed on the shares.

Sony said it expects the quake and the hacking incident to drag down operating profit by 164 billion yen in the current financial year. In contrast, the decline in Sony's market capitalisation of 264 billion yen since the quake "looks overdone", Macquarie analyst Jeff Loff wrote in a report.

Tax credits

"With shares cheap and cost impacts one-time in nature, we expect the stock to reverse its fall."

Sony expects to report a net loss of 260 billion yen for the year ended on March 31, its third straight annual net loss, after writing off tax credits following Japan's earthquake and tsunami. Many of Sony's rivals, including Panasonic Corp, have yet to issue forecasts for the current year due to uncertainty following the disaster.

Shares in Sony, the maker of PlayStation video games and Vaio computers, were up 2.4 per cent by 0340 GMT, outperforming a flat Tokyo electrical machinery subindex. Sony's shares dipped nearly 1 per cent in early trade, to its lowest since the immediate aftermath of the earthquake.

Some fund managers however said the shares, down 22 per cent so far this year, might not see sharp gains.

"I agree that shares are unlikely to keep sliding, but neither do I see any new catalysts that would bring the share price up. I expect shares to continue meandering back and forth at low levels," said Makoto Kikuchi, chief executive officer at Myojo Asset Management.

High added value

"It's not just Sony. Panasonic, Sharp — all Japanese home electronics makers have seen the base of their share price sink. They can't compete in prices, so the only route they have is to create new markets with high added value. Products that would make people pay more."

"Sony used to have this ability. But I don't see anything that would make share prices rise this fiscal year."