“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?”

Well, there’s a first time for everything. And with the widening gyre of the recession as backdrop, the company now expects to report one. Sharp this morning revised its earnings outlook to a loss for its current fiscal year.

Back in October, the company forecast a net profit of 60 billion yen for its fiscal year ending March 31. Today it changed that forecast to a net loss of 100 billion yen.

Ugly.

Said Sharp Director Tetsuo Onishi: “The decline in LCD-TV prices was so steep that it pushed our business into the red, and was so sharp that our cost-cutting efforts couldn’t keep pace.” In hopes of catching up, Sharp plans to cut 1,500 part-time jobs and shutter some production lines at two liquid crystal display manufacturing plants in Japan.

At the time, anyway. A patent dispute with Applied Nanotech soon stalled SED TV’s commercial debut. Which was a nasty break for Canon. With a performance and picture quality said to be far higher than LCD or plasma, SED was vital to expanding the company’s presence in the digital living room, which, lets face it, never extended much beyond digital cameras and printers.

Well, Canon’s big plans for the digital television business are back on track again. Applied Nanotech has dropped its claims against the company, saying to continue litigation “would probably be a futile effort.” And that means Canon is now free to bring SED TVs to market, some three years after first announcing plans to do so. Question now is this: Is it three years too late? With LCD and plasma displays more affordable, SED has lost quite a bit of its competitive edge. And with a decline in TV prices prompting profit warnings from the likes of Sony (SNE) and Panasonic (PC), the TV business isn’t looking too inviting.

Launched amid great fanfare earlier this year, the device has since faded into obscurity. Apple hasn’t yet released sales figures for the streaming set-top box, but research outfit Forrester believes them to be lousy enough to point to Apple TV as a monument to the “iTunes video revolution that never happened.” Seems Forrester’s estimate of 1 million units sold during the device’s first year have fallen well short of initial expectations. “In addition to the 400,000 Apple TV units we estimate Apple has sold thus far, the company will be lucky to sell another 400,000 in the year-end holiday rush, short of our one million estimate,” said analyst James McQuivey. Worse, while nearly half of all adults with access to the Internet have heard of the device, fewer than 3% intend to purchase one.

Clearly, the vaunted iPod halo effect doesn’t extend to the Apple TV. Why? “The problem with the Apple TV is that its fate is ultimately in the hands of the content owners, not Apple,” Ars Technica’s Charles Jade writes. “Those still thinking Steve Jobs will work out a deal with the movie studios like he did with the music labels need to understand that is exactly why he won’t get such a deal. The best Apple can hope for in 2008 is high-priced, low-quality content, but that isn’t going to save the Apple TV because it never should have existed in the first place. … Rather than be dependent on the content producers for the success of the Apple TV, why not just sell LCD TVs that are an extension of whatever computer is in the house? Sure, margins on LCD TVs are razor thin, but if your goal is to get in the living room you can bet that a TV is one thing everyone will have, now and five years from now. Of course, if the goal is a solid profit on every Apple TV sold, I’m sure the Macintosh TV had fat margins too. For about a year.”

To keep you abreast of tech news while he’s away, we’re compiling a daily digest of 10 must-read tech stories. We’re calling it the Tech 10 and it appears below.

1. As inevitable as death and taxes: YouTube, the world’s No. 1 video site, will begin placing ads in its videos, All Things Digital’s Kara Swisher reports. The animated advertising will appear no earlier than 15 seconds into a video, overlaid on the bottom fifth of the screen. Citing viewer revulsion, a YouTube product manager told NewTeeVee the site will not use the dreaded preroll or postroll.
2. Apple, leveraging its deal-brokering with AT&T stateside, has signed up European partners for iPhone sales and service. A report in the Financial Times notes that three telecoms–T-Mobile in Germany, Orange in France and O2 in the United Kingdom–will fork over 10% of the revenues made from iPhone calls and data transfers.



3. Stargazing earthlings will get a new perspective today, as Google unveils Sky, its view of the heavens from Earth. The New York Times reports that users will be able to zoom around to view millions of stars and galaxies, much as they do on a smaller scale with Google Earth.
4. Henri Richard, the very visible top sales officer of Advanced Micro Devices, is leaving the troubled chip maker. Confirming an earlier report on Hexus.net, Tom Krazit of CNET describes the executive vice president’s departure as a “significant development in what has been a disastrous year for AMD,” precipitated by its postponement of Barcelona, its quad-core server chip.
5. Regrouping years after the dot-com implosion, the online-trading business is in for some consolidation now that TD Ameritrade Holding Corp. and E*Trade Financial Corp. are holding merger talks. The Wall Street Journal is reporting that the potential union could create a single dominant force in what has been seen as a highly fragmented industry, with many small companies in the competitive fray.
6. Spotting potential in the social-networking trend, U.S. spy agencies plan to develop an information-sharing portal based on MySpace and Facebook. According to the Register, taxpayers, rather than advertisers, will foot the bill for the spook Web site.
7. Darkening the cloud of suspicion hanging over electronic-voting machines, California’s secretary of state has accused Election Systems & Software of selling about 1,000 uncertified electronic-voting machines to five California counties in 2006, according to IDG News Service. The state has instituted new security standards for all electronic-voting machines after a review sharply criticized the technology.
8. Reconsidering the upswing in PC gaming, Microsoft is bringing back its SideWinder line of peripheral equipment, starting in October with a new mouse, reports the Seattle Post-Intelligencer. The device will cost $79.95 and includes a wider scroll wheel, special buttons and other doodads for gameheads.
9. Joining the competition for the thinnest TV screen, Sharp is unveiling a 2-centimeter thick LCD screen. PC World reports that the prototype TV will get its signals via a high-speed wireless link, eliminating the need for a cable.



10. Talk about a cybervirus. Epidemiologists have found that studying an imaginary epidemic in an online game world could provide valuable clues to coping with the real thing. Writing about research published in the September issue of Lancet Infectious Diseases, ABC News reported that researchers from Tufts and the University of North Carolina are serious in applying the lessons of online epidemics (in particular, the “corrupted blood” that spread on World of Warcraft in 2005) to disease-control efforts worldwide.

–posted by Associate Editor John Sullivan