By Cornelius Wilson on 12/12/07 at 2:39 PM

Dec. 11 (Bloomberg) -- Sony Corp. Chief Executive Officer Howard Stringer plans to connect the company's flagship PlayStation 3 console with its other electronics as part of its growth strategy next year and beyond.

The world's second-largest consumer electronics maker will hook up the PS3 with its PlayStation Portable console online before extending the links to products such as mobile phones, Stringer said in Tokyo today. The current three-year business plan ends on March 31.

The move revives a strategy by Nobuyuki Idei, who was replaced by Stringer in June 2005 amid investor discontent over his failure to meet business targets. Stringer's plan revolves around a games division that has lost money for seven straight quarters because of costs to develop the PlayStation 3 and as sales trailed Nintendo Co.'s Wii and Microsoft Corp.'s Xbox 360.

``The plan may be difficult to carry out without strong sales of the PlayStation 3,'' said Osamu Hirose, an analyst at Tokyo Tokai Research Center, who says investors should buy Sony shares on ``weakness.'' ``PS3 costs are coming down, so it would be at an affordable price to be used as a hub in the future.''

Sony rose 2.6 percent to 6,230 yen on the Tokyo Stock Exchange. The stock has risen 60 percent since Stringer, Sony's first foreign CEO, was named, topping the 39 percent gain in the benchmark Nikkei 225 Stock Average. Sony's American depositary receipts fell 10 cents to $54.59 at 4:02 p.m. in New York Stock Exchange composite trading.

Sony forecasts a 50 billion yen operating loss at the game business this fiscal year and expects the unit to break even in the 12 months starting April 1, 2008.

PlayStation 3 Sales

Chief Financial Officer Nobuyuki Oneda said Oct. 25 that the company may miss its target to sell 11 million of the consoles during the year ending March 31.

The company sold 2.02 million PlayStation 3 machines in the first half ended Sept. 30. That's less than one-third of the 7.34 million for the $250 Wii, which sports a motion-sensing controller that users can swing like a golf club or brandish like a sword, with movements replicated on screen.

Ken Kutaragi, developer of the PlayStation consoles, retired in June after production delays caused PS3 sales to lag behind rival game consoles.

The PlayStation 3 outsold the Wii for the first time in Japan last month, after Sony cut prices and offered a cheaper model, Tokyo-based research firm Enterbrain Inc. said in November.

Stringer today said the company sells about 200,000 PlayStation 3 consoles in Europe each week, and 40,000 to 50,000 in Japan. It also sold more than 200,000 in the U.S. following ``Black Friday,'' the day after Thanksgiving.

Margin Goal

The executive reiterated the company will meet a target to earn 5 cents from its operations for every $1 in sales by the year ending March 31. Sony had an operating profit margin of 4.68 percent in the six months ended Sept. 30.

The ``shaky'' economy ``hasn't affected our electronics in the U.S. so far,'' Stringer said.

Sony in October forecast record net income and sales this fiscal year, helped by Cyber-shot cameras and gains from the sale of shares in its financial unit.

Idei tried during his six-year tenure to connect the PlayStation 2 console, televisions, computers and mobile phones over the Internet, allowing customers to download Sony's movies.

Shareholders at an annual meeting in June 2002 questioned the plan's viability, partly because it would rely on a film business whose performance depends on Sony's ability to keep churning out hits.

Sony will advance development of so-called organic electroluminescent displays, also known as OLEDs, next fiscal year as part of the three-year business plan, Stringer said today, without elaborating.

The company last month began selling 11-inch televisions with the screens, which are brighter, thinner and consume less power than current liquid-crystal display models.



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