With the consumer electronic industry still languishing, Sony (SNE) has little reason to be optimistic. In an interview with Italian business daily Il Sole 24 Ore, CEO Howard Stringer said he’s seen little sign of a recovery in Sony’s business. “From my viewpoint, that of Sony and its consumer electronics products the picture for the time being has not improved very much,” Stringer said. “There hasn’t been that turning point that many had hoped for. We are waiting for a signal that hasn’t arrived.”

In a research note today, FTN Equity Capital Markets analyst James Hardiman said “evidence is mounting” that Sony will announce a PS3 price cut, perhaps during its Tuesday presentation at GamesCon.

Videogame analyst Heath Terry of FBR Capital Markets shares this view, and in a note to clients, he put a dollar figure on the cut. “With Sony set to announce a $100 price cut on the PS3 on Tuesday at Gamescom in Germany according to our retail checks, we believe the other hardware manufacturers will respond with a combination of price reductions and bundling strategies that should drive significant acceleration in hardware sales,” Terry wrote, adding that the cut, should it come to pass, will mark “the first of a series of catalysts that should drive a return to growth” for the videogame industry.

Certainly, it would give Sony (SNE) a nice boost in sales in the run-up to the winter holiday consumer binge. And given its most recent financials, the company could really use one right now.

“If we were any more successful, we’d be bankrupt.”

– Sony CEO Howard Stringer on the company’s LCD business, May 28, 2008

About the best thing to be said for Sony’s grotesque financial results is that they came in smaller than expected. The company’s 98.9 billion yen ($1 billion) loss for the fiscal year ended March–its first net loss in 14 years–wasn’t nearly as bad as the 150.0 billion yen ($1.57 billion) figure it had predicted in January or even close to the 173.8 billion yen ($1.8 billion) analysts polled by Thomson Reuters had been forecasting. And the same is true for Sony’s fourth quarter, as well. The net loss of 165.1 billion yen ($1.7 billion) it reported was far better than the 228.7 billion yen ($2.39 billion) forecast.

Still ugly as hell, though. And according to the company’s leadership, its next fiscal year will be little different. Sony is forecasting a loss of 120 billion yen ($1.2 billion). Given that unfortunate outlook, Sony (SNE) is closing three factories in Japan, part of an ongoing effort to shore up a business ravaged by the worst recession in decades. But cost-cutting measures like that can only do so much.

As analysts note, what Sony really needs is a killer product. It is no longer the force it once was in consumer electronics, having ceded its dominance in portable music players to Apple (AAPL) and its leads in the television and videogame console markets to Samsung Electronics and Nintendo. “Their outlook gave me the impression that their business is heading for a gradual recovery,” Fujio Ando, senior managing director at Chibagin Asset Management, told Reuters. “But it would all depend on whether they would be able to start producing popular products, because right now they have no ‘Number One’ products. I see Sony’s branding power weakening.”

And that’s something of which Sony is painfully aware.

“We have two distinct challenges facing us,” Sony CEO Howard Stringer recently told the New York Times. “The first is the global slowdown, which forces us to make significant adjustments. The second challenge is the evolution of our competitive environment. New competitors [are] springing out everywhere.”

Indeed. And while Sony seems to be meeting the first challenge, albeit slowly, it hasn’t yet begun to make headway toward meeting the second. And at this point, one wonders if the company is even capable anymore. As Japanese Economy, Trade and Industry Minister and former Sony employee Akira Amari asked back in October 2006, “What has become of the Sony known for its technology?”

What has become of the Sony known for its technology? I hope it will solve its problems soon to quickly recover its brand image reputed for technological prowess.”

– Japanese Economy, Trade and Industry Minister and former Sony employee Akira Amari, October 2006

Now that Sony’s old guard has taken what was once a strong electronics and gaming brand and run it into the ground, the company’s new guard is circling back to resurrect it. This morning the company announced a management overhaul that will see CEO Howard Stringer succeed Ryoji Chubachi as president and assume responsibility for Sony’s key electronics division. It will also see the creation of two new business groups: The first, Networked Products & Services Group, will consolidate Sony Computer Entertainment, the company’s Vaio division and its mobile and Walkman unit. The second, the New Consumer Products Group, will include Sony’s TV, digital imaging, home audio and video businesses. Spanning the two groups will be a cross-divisional software and technology unit charged with ensuring compatibility among their products.

Sony (SNE) says its new structure is aimed at giving the company the agility it has so sorely lacked for so long and to “speed up the transformation of Sony that was started four years ago,” which has all but stalled, if the company’s recent financial performance is any indication. “Have I broken down all the silo walls? No,” Stringer told the New York Times. “Are they very strong and very thick? Yes. But we’ve broken down a lot of them. Our goal is to continue to do that. We have two distinct challenges facing us. The first is the global slowdown, which forces us to make significant adjustments. The second challenge is the evolution of our competitive environment. New competitors springing out everywhere.”

If we were any more successful, we’d be bankrupt.”

– Sony CEO Howard Stringer on the company’s LCD business, May 28, 2008

What a dark day this is for Sony. Its hand forced by a profound deterioration in the current business environment, the company today slashed its forecast for the current financial year and said it will soon post an annual loss for the first time in 14 years. And that loss will be far worse than even the most pessimistic forecasts–$1.65 billion.

A bitter turn of fortune for Sony (SNE), which as recently as October had claimed it would make a profit this year. Clearly, the deepening worldwide recession has been particularly cruel to the company. And though Sony is attempting a perilously overdue restructuring that will trim 16,000 jobs and six factories from its books, analysts are beginning to wonder if the notoriously fragmented company might need to take even more drastic steps. “Its business model and operational issues account for 80-90 percent of Sony’s poor earnings,” Nomura Securities senior analyst Eiichi Katayama told Reuters. “Domestic production costs are a concern but this move is not something that would bring it back to the black or cut losses in half. Sony has to consider ways to lower fixed costs not only for its TV business but for the whole company. It will have to start cutting development costs in addition to production costs.”

If Amari can recall when that was Sony’s image, he has a good memory. Because Sony (SNE) lost its dominant position in consumer electronics to rivals in Japan, South Korea and the U.S. long ago and has yet to regain it.

And nowhere is that more apparent than in the the company’s videogame division, which really should be the shining star in Sony’s core electronics business. Sales of Sony’s Playstation 3 console fell 19 percent year-over-year in November, according to NPD. This while sales of Microsoft’s Xbox 360 rose eight percent and sales of Nintendo’s Wii doubled. U.S. consumers purchased two million Wii consoles and 836,000 Xbox 360s last month. But they bought just 378,000 PS3s.

Ugly news for Sony and for CEO Howard Stringer, who’s promised the company’s games division will turn a profit this fiscal year after two years of losses. Clearly, Sony’s going to have a tough time managing that. No easy task peddling the $399 PS3 to a public that would much prefer to spend $150 less on the Wii.

This year’s D conference had its share of great lines–tired ones, too (we’re all clear on the subject of Facebook and information sharing, right?). Here’s a selection of the former…

Guys like us avoid monopolies. We like to compete.”

–Microsoft (MSFT) Chairman Bill Gates

AOL is the Rodney Dangerfield of the Web. We don’t get no respect.”

–Jeff Bewkes, president and CEO, Time Warner (TWX)

I will probably never be a CEO again.”

–Yahoo (YHOO) CEO Jerry Yang states the obvious

It’s a company that creates technology.”

–Facebook CEO Mark Zuckerberg answers the question, “What is a technology company?”

Did you have anything to do with the New York Post’s endorsement of Obama?”

–Walt Mossberg to Rupert Murdoch

“Yeah.”

–Rupert Murdoch to Walt Mossberg

I didn’t leave business school to go bankrupt.”

–Microsoft CEO Steve Ballmer on his first days at Microsoft

You would have loved Windows 1.0, Walt. You would have LOVED it.”

–Microsoft CEO Steve Ballmer

Microsoft’s philosophy is to ‘do things better.’ And Vista has given us lots of opportunity to do that.”

–Microsoft Chairman Bill Gates

Microsoft Bob? All Bill’s idea.”

–Craig Mundie, chief research and strategy officer of Microsoft Corp.

It makes revolutionary desserts you never could have imagined!”

–Microsoft CEO Steve Ballmer recalls the slogan he used to market Coldsnap Freezer Dessert Makers at Proctor & Gamble

C’mon, you CAN’T be happy with the way this Vista thing has gone.”

–Walt Mossberg to Microsoft CEO Steve Ballmer

In some ways the Web is the most important book in the world.”

–Jeff Bezos, CEO, Amazon.com (AMZN)

We try to stick to violence against small animals.”

– Activision (ATVI) CEO Bobby Kotick on violence in the company’s games.

I have to determine whether the joy of craplets is worth preserving.”

–Sony (SNE) CEO Howard Stringer on craplets on Sony PCs

Facebook is all about information and helping people share it.”

–Facebook CEO Mark Zuckerberg and COO Sheryl Sandberg demonstrate “I-Have-Nothing -To-Say-And-I-Am-Saying-It” public relations.

‘Sharing information?’ Isn’t that a drinking game? Every time Mark Zuckerberg says it you have to drink.”

–Kara Swisher

Page got one of the two chairs and Schmidt wound up on the floor.”

–Facebook CEO Mark Zuckerberg on meeting with Google’s (GOOG) Larry Page, Sergey Brin and Eric Schmidt in his spartan apartment.

All lives are equal.”

–Melinda Gates, co-chair, Bill & Melinda Gates Foundation on D6 Highlights

Betamax 2.”

–Sony CEO Howard Stringer on what his epitaph would have been had Sony lost the DVD format war.

If we were any more successful, we’d be bankrupt.”

–Sony CEO Howard Stringer on the success of Sony’s LCD business.

Hollywood is a community that’s so inbred, it’s a wonder the children have any teeth.”

–Barry Diller, chairman and CEO, IAC (IACI)

People loved their horses, too. But you don’t keep riding your horse to work just because you love it.”

–Amazon CEO Jeff Bezos on the difference between physical books and digital ones

I could take him.”

–Dell (DELL) CEO Michael Dell on his chances of success in a brawl with Apple CEO Steve Jobs

It’s amazing how elastic the human brain turns out to be.”

–DEKA Research founder Dean Kamen

It’s like Baby Mama, with me as the mama.”

–Intellectual Ventures founder Nathan Myhrvold explains the company’s “invest in inventions” business model.

Windows 95 was a nice milestone.”

–Microsoft Chairman Bill Gates on one of the high points of his career

I won’t ever stop until you’re either the biggest thing around, or you’re dead.”

–Kara Swisher on her relentless coverage of Facebook

We think they’re fantastic … But you don’t want anyone to be a monopoly.”

–Rupert Murdoch on Google

Coming from Google, you don’t exactly spend a lot of time at Microsoft.”

–Facebook COO and former Vice President of Global Online Sales and Operations at Google Sheryl Sandberg

We’re trying to outbook the book.”

–Amazon CEO Jeff Bezos on Kindle.

There go the dairy ads.”

– Walt Mossberg on 23andMe’s discovery that colleague Kara Swisher is lactose intolerant

We didn’t buy Alaska to save a couple of elk.”

–News Corporation (NWS) Chairman and CEO Rupert Murdoch on Alaska as a solution to the current fuel crisis.

Where’s Rupert’s elk-despising gene?”

–Kara Swisher while reviewing Murdoch’s genotype

That’s not serious … he just wants to make himself a few hundred million dollars …”

–Rupert Murdoch on Carl Icahn’s proxy fight for Yahoo

You’re the chairman of the FCC. How did you allow this to happen?”

–Walt Mossberg grills FCC Chairman Kevin Martin on the lousy broadband situation in the states.

Apparently, Stringer (who was interviewed at the fourth edition of D: All Things Digital conference on May 31, 2006) seems to have forgotten that the price of failure in the samurai warrior code is seppuku–ritual suicide by disembowelment. Because here we are two years after his vow and Stringer, onstage at the company’s annual meeting this year, again proclaimed himself a warrior–despite the conga line of blunders and financial misses that have plagued Sony for the past few years. “In the digital age, we have new competitors–not just consumer-electronics companies, but IT companies like Apple and Microsoft and Intel and Chinese companies,” he said. “The integrated approach to this competition using electronics, games and entertainment, seamlessly integrated with software, will be the best way to be the dominant company. We will shift Sony from recovery to profitable growth.”