By Kiyoshi Takenaka

TOKYO (Reuters) - Sony Corp's consumer electronics business in the U.S. market has not been affected by the shaky economy and is on track to hit a 5 percent operating margin for the year ending March 31, Chief Executive Howard Stringer said.


Electronics operations account for nearly three quarters of Sony's total sales, while the 5 percent margin target has been considered the most visible indicator of success for Stringer's turnaround efforts.

The economy "has not affected electronics in the U.S. We are holding up," Stringer told a group of reporters at a round table meeting on Tuesday.

"Black Friday turned out to be very good for consumer electronics sales, and very good for PS3 (PlayStation 3) sales, PSP (PlayStation Portable) sales and beyond."

Black Friday, or the day after Thanksgiving, is widely seen as the starting point in the United States of the holiday shopping season.

Stringer said he sees its PlayStation 3-based online content distribution service, the PlayStation Network, as a key growth driver for Sony as it expands its offerings.

"PlayStation Network next year puts us in the direct line of fire with Apple Inc and Microsoft Corp ," Stringer said.

Both Microsoft and Apple already offer downloading services for non-game entertainment content such as TV programmes, while Sony's PlayStation Network now mainly offers videogame software and game-related promotional video clips.

The PS3 has trailed behind Nintendo Co Ltd's Wii in sales since their launches a year ago due to the Sony machine's high price and initial scarcity of strong software titles.

But PS3 demand has shown some signs of picking up since the company cut prices and launched a new version in recent months.

Sony is locked in a three-way battle with Microsoft and Nintendo for dominance in the global video game market, and it competes with Samsung Electronics Co Ltd in flat TVs.

SONY FINALLY UNITED?

Welsh-born Stringer took Sony's helm in June 2005, advocating "Sony United" in a bid to break down walls separating each business division and create synergy effects by bringing together independent-mind engineers.

"On Friday, we had a dinner where the heads of Sony Electronics ... Pictures, and Sony BMG, Sony PlayStation were all at the same dinner table intermingled and actually communicating," he said.

"I think you will agree that would not be possible six years ago without serious bloodletting."

Stringer, along with Sony President Ryoji Chubachi, has aggressively shed non-core assets in a restructuring aimed at putting the company back on a solid growth path by focusing on core businesses such as electronics operations.

The maker of Cyber-shot digital cameras and Vaio personal computers last month launched the world's first flat TVs based on organic light-emitting diode (OLED) technology in Japan, flexing its technological muscle.

Sony plans to start selling the ultra-thin OLED TVs, which are energy efficient and offer crisp pictures and have strength in showing fast-moving images, in the United States next year, a company spokesman said.

Shares in Sony have gained 63 percent since Stringer became chief executive two and a half years ago, far outstripping the Nikkei average , which rose 39 percent.

Stringer, the first non-Japanese to run the Tokyo-based electronics and entertainment conglomerate, said that he will stay with Sony's management for at least another three years.

"Am I going to be here for the next three years? The answer is yes. Am I going to be here for the next 10 years? Probably not," he said.

Ahead of Stringer's comments, shares in Sony closed up 2.6 percent at 6,230 yen, while the Nikkei put on 0.76 percent.

(Editing by Sophie Hardach, Paul Bolding)
© Copyright 2007 Reuters.

Photo:
Sony Corp Chairman and Chief Executive Officer Howard Stringer speaks during a roundtable meeting with reporters in Tokyo December 11, 2007. Sony's consumer electronics business in the key U.S. markets has not been affected by the shaky economy, and it is on track to hit a 5 percent operating margin for the year ending March 31, Stringer said on Tuesday. REUTERS/Yuriko Nakao