Sony shares jump after profit forecast

By Sachi Izumi and Mariko Katsumura

TOKYO (Reuters) - Shares of Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) soared 9 percent to their highest in two and a half months on Thursday after it forecast an unexpectedly big operating profit this year as it aims to boost flat TV sales and wipe away losses on the PlayStation 3 game console.

Despite suffering an operating losses in the fourth quarter, Sony, locked in a three-way battle with Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) and Nintendo Co Ltd (7974.OS: Quote, Profile, Research, Stock Buzz) in the game console industry, has been able to narrow losses on PlayStation 3 by cutting manufacturing costs and expanding sales.

With a recovery in the game business, Sony now aims to take its videogame and TV operations into profit this year.

Sony's surprisingly strong outlook followed other bullish results by Matsushita Electric Industrial (6752.T: Quote, Profile, Research, Stock Buzz) and Nikon Corp (7731.T: Quote, Profile, Research, Stock Buzz), easing investors' worries over the negative impact from a stronger yen and a decline in consumer spending both at home and overseas.

"With their strong brand name and pricing strategy, Sony successfully rode off negative waves like a stronger yen, price competition and generally weak Christmas sales in North America," said Ichiyoshi Securities' chief strategist Masanobu Takahashi.

"Now the market knows who the winners are, and money is targeting only such winners."

Sony, the maker of VAIO personal computers and BRAVIA television sets, said on Wednesday it expects operating profit to grow 20 percent to 450 billion yen ($4.28 billion) in the year to March 2009, beating a market consensus of 428.5 billion yen. The upbeat outlook comes despite hurdles such as a slowing U.S. economy and a stronger yen.

In the January-March quarter Sony suffered an operating loss of 4.7 billion yen as a weak stock market ate into the value of securities held by its finance arm. The result fell short of an average estimate of a 27.3 billion yen profit from five analysts surveyed by Reuters.  Continued...