Sony Corp said it would launch 3D TVs and networked products and services to unleash its potential as an electronics and entertainment giant and reverse its fortunes as it heads for a second straight annual loss.

The maker of PlayStation games consoles and Cyber-shot digital cameras pushed back an elusive target of an operating profit margin of 5 percent to March 2013, but said it aimed to make video game and TV operations profitable next year.

Sony Chief Executive Howard Stringer had originally set the 5 percent margin target in 2005 for the financial year to March 2008 but the company narrowly missed it, and its plans for recovery have since been waylaid by the economic slowdown.

It will be quite a challenge for Sony to turn its TV business profitable next year. Price declines are cancelling their cost cut efforts, said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co.

On 3D TVs, we just have to wait and see if it will come up with the kind of products that excite consumers ... I don't think many people were convinced enough today to go and buy Sony shares tomorrow.

Sony's TV business is in its sixth consecutive year of losses as it struggles to compete with nimbler South Korean rivals such as Samsung Electronics Co Ltd <005930.KS>.

Sony plans to launch 3D TVs next year, and aims for more than 1 trillion yen ($11.24 billion) in sales of 3D-related products in the year ending March 2013.

Its PlayStation 3 game consoles in homes across the world can become 3D-compatible by simply updating its software via the Internet, Sony said.

On its online operations, the company plans to launch a wide range of network-capable TVs, Blu-ray players and electronic book readers, among other devices, and introduce a new online service to distribute movies, music, books and games to those machines.

Sony, which already offers video game titles online to PlayStation 3 and PlayStation Portable users, plans to boost such content sales to 300 billion yen by the year ending March 2013, up from an estimated 50 billion yen this year.

When you tie innovative new hardware together with compelling content network services and common user interface across products, you've created a unique user experience that can differentiate Sony from the competition, Stringer said.

NOT OUT OF THE WOODS

Sony said it planned to make a late entry into the market for auto-use lithium-ion batteries at some point and would work to grab 40 percent market share in 2012/13 for its electronic reading devices, challenging Amazon's Kindle.

It plans to cut 330 billion yen in costs this business year to March 2010, and has already carried out about 80 percent of the targeted reduction in the first half through September.

Sony's internal cohesion has reached the point where they've been able to deliver on promises to restructure and also set forward a new product strategy, Mitsubishi UFJ Securities analyst Masahiko Ishino wrote in a report to investors.

But there are still many high hurdles left, such as the ability to really supply strong and innovative products.

In an effort to improve profitability at its TV operations, Sony plans to have 40 percent of its LCD TVs assembled by outside manufacturers in the next business year starting April 2010, up from 20 percent this year.

It aims for a 20 percent share in the global LCD TV market in unit terms in the year to March 2013. That compares with an 8.7 percent share it held in July-September, according to data from research firm DisplaySearch.

Sony, locked in battle with Microsoft Corp and Nintendo Co Ltd <7974.OS> in the global game industry, in September launched a cheaper model of its PlayStation 3 game console to spur demand.

Thanks to the more affordable version, the PS3 in September became the top-selling console in the U.S. for the first time since its release in late 2006.

We are better, we are leaner, we are faster. We have done some of the really difficult things, such as closing factories, Stringer said. But the company still needs to be more efficient, he said. We are not satisfied.

Shares in Sony closed down 2.2 percent ahead of the announcement, underperforming a 1.7 percent fall in Tokyo's electrical machinery index <.IELEC.T>.

(Editing by Edwina Gibbs and Will Waterman)

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