Japan''s Sony Corp, the maker of PlayStation game gear and Vaio PCs, said on Thursday it would cut costs and attract more orders to offset the negative impact of the yen''s strength on its profit.

A stronger yen against the dollar threatens to cut into Sony''s profits at a time when it is already struggling to boost margins on flat televisions due to falling prices and is playing catch-up with Nintendo in the video game market.

"We will lower our production costs and accept more orders so that the impact of the firming yen on profits will not be that serious," Sony President Ryoji Chubachi told a news conference at an event in Taipei.

The rapid rise of the yen and other Asian currencies against the dollar has hurt exports from the region to the United States, a key sales destination for companies such as Sony.

Every one yen rise against the U.S. dollar, the company loses about 6 billion yen ($59 million). This year alone, the yen has strengthened from about 111 to the dollar to about 102.5, although it was as strong as 95.7 last month.

Sony, which vies with Samsung Electronics Co Ltd and Sharp Corp in flat-panel TVs, has shed 10,000 jobs and a wide range of non-core assets over the past few years.

Sony shares were 0.7 percent higher in Thursday trading in Tokyo, lagging the broader market .N225 up 1.2 percent.

LCD PRICES TO FALL

Separately, Chubachi reiterated that Sony was aiming to take 15-20 percent of the fast-growing global market for liquid crystal display (LCD) TVs this year. Sony was a relative latecomer to the market, but has aggressively developed and promoted the popular product over the last two years.

Chubachi also said Sony expected LCD panel prices to keep falling this year, though he did not elaborate.

Panel prices fell sharply in 2007 as large volumes of new supply came onstream, outpacing new demand for LCD televisions and flat-screen PC monitors, the two main products that use LCD panels. But price drops have slowed this year as demand picks up and new supply levels off.

In January, Sony posted a small rise in quarterly operating profit and cut its outlook as weaker markets ate into its investments and a firmer yen hurt overseas sales.

Sony enjoyed robust holiday demand for its Cyber-shot digital cameras and Handycam camcorders and managed to return its game division to profit by cutting PlayStation 3 production costs and boosting sales of its portable game machine.

But citing the rising yen, the company at that time lowered its operating profit forecast for the fiscal year to March to 410 billion yen from 450 billion yen.

It raised its net profit forecast for the fiscal year by 3 percent to 340 billion yen, however, on the strong performance of its mobile phone joint venture with Ericsson and one-off gains from the listing of Sony Financial Holdings Inc.

Chubachi also said that in its 2007 fiscal year, Sony''s purchasing from Taiwan suppliers, encompassing a wide range of electronics such as LCD panels, grew 10 to 20 percent from fiscal 2006.



Source:Reuters