Sony Corp's operating profit fell 5.9 percent in October-December, hurt by a stronger yen and tough price competition in the market for flat TVs, although it beat analysts' expectations.

KEY POINTS:

-- Sony's third-quarter operating profit fell 5.9 percent to 137.52 billion yen ($1.68 billion), while net profit dropped 8.6 percent to 72.33 billion yen.

-- The consensus estimate for Sony's quarterly operating profit was 124.2 billion yen in a poll of nine analysts by Thomson Reuters I/B/E/S.

-- Sony left its full-year profit forecast unchanged at 200 billion yen, compared with a consensus estimate of 217 billion yen in a poll of 23 analysts by Thomson Reuters I/B/E/S.

-- Sony lowered its 2010/11 TV sales target to 23 million units from 25 million, while its full-year PS3 game console sales target was left unchanged at 15 million units.

COMMENTARY:

TOSHIHIKO MATSUNO, SENIOR STRATEGIST, SMBC FRIEND SECURITIES, TOKYO

Sony's downward revision to its LCD TV sales forecast would appear to reflect the fact that LCD TV sales are not growing in the United States.

It was the same for Funai Electric. The stock has been in a correction phase since December and the sluggish earnings would seem to be already factored in to a certain degree.

But I don't see any factors to trigger buying, other than some short covering now that the results are out.

Even if TV sales bounce back, in the absence of a new innovative product worthy of the Sony name we should not be expecting the stock to stage a full-fledged recovery.

KOICHI OGAWA, CHIEF PORTFOLIO MANAGER, DAIWA SB INVESTMENTS, TOKYO

The first impression isn't bad. It seems like the operating profit was solid on the back of a strong performance in the games operations, so the point now is whether growth in this segment is sustainable.

Ogawa said that, although Sony's results were not bad compared with its major domestic rival Panasonic, in the long run it is falling well behind major international players such as Apple.

Sony hasn't even come up with its own tablet, and is already a year behind Apple. It's not a company that has the appeal of a fresh and innovative powerhouse.

Sony also left it's yearly operating profit forecast unchanged, and in the long run its TV operations will weigh on its performance, so it's hard to say what the impact will be on the firm's share price.

Ogawa added that perhaps in the very short term the market's reaction may be positive, but it would depend on Sony's comments regarding its game business, which tends to be very volatile.

NOBUO KURAHASHI, ANALYST, MIZUHO INVESTORS SECURITIES, TOKYO

Sony's results reflect the cost cutting and restructuring the company has been doing. Given the severe business environment including the strong yen, I think the results were good.

Although its seems to have made progress on structural improvements, it still has a long way to go to catch up with its rival Samsung.

Sony needs to continue to make efforts to provide innovative products in order to aim for a top position in the market.

BACKGROUND

-- Shares in Sony have fallen more than 20 percent from an 18-month high of 3,645 yen reached in March last year, largely reflecting the yen's rise against the dollar and the euro.

-- Panasonic reported lower quarterly profit this week, blaming falling prices, especially for TVs. South Korea's LG Electronics had a loss in the same period and Samsung Electronics booked its lowest profit in six quarters. The four companies have a combined global share of about 60 percent of the flat-screen TV market by revenue.

($1=81.72 Yen)

(Editing by Edmund Klamann)