The electronics giant said full year net profit jumped more than sevenfold to 115.5 billion yen (963 million dollars) but the figure fell well short of an earlier forecast.

"We cannot leave the situation unaddressed and let profitability tumble," said Sony Corp. chairman and chief executive Nobuyuki Idei.

"We must now face new challenges and changes. In a way, we are now at a key transition phase," he told a news conference.

A one-off gain from selling a Spanish language television unit helped boost pre-tax profit 166.9 percent to 247.6 billion yen in the year to March.

But earnings were hurt by losses from affiliated companies such as Sony Ericsson Mobile Communications, a 50-50 cellphone joint venture with Ericsson of Sweden.

Sony's sales slumped 1.4 percent over the year to 7.47 trillion yen due to disappointing performances by its electronics and music arms.

Revenue from the electronics division fell 6.5 percent during the year -- including declines in the key US and Japanese markets -- hit by slack demand for Aiwa televisions and radios, and Vaio personal computers.

Sony's game business also suffered a drop in sales due to price reductions on its popular PSone and PlayStation2 video consoles.

A rise in digital piracy has also been taking a toll on the music industry and eating into Sony's revenue.

In the three months to March, the firm's net loss widened to 111.1 billion yen from 5.5 billion yen a year earlier, while revenue slumped 12.2 percent to 1.65 trillion yen.

"On a geographic basis, sales decreased significantly in Japan and the US," Sony said in a statement.

In a bid to turn around its fortunes, Sony announced a plan to spend 1.3 trillion yen in the next three years to March 2007.

"I wanted to share with you my strong commitment to new structural reform. We will consider lowering costs especially in Japan and selling non-core assets here," Idei said.

The company has already cut staff levels, chiefly in its electronics and music divisions, by about 6,900 people to 161,000 in the year to March 2003.

Some 500 billion yen would be pumped into developing and producing key devices such as semiconductors and graphics chips, where future rapid growth is expected, said Teruhisa Tokunaka, chief strategic officer.

Another 500 billion yen will strengthen research and development and 300 billion yen will be spent on restructuring charges aimed at boosting efficiency.

Analysts felt a fresh restructuring drive was long overdue.

"I think it's a time for Sony to trim the fat, make everything more efficient," said Richard Chu, an electronics analyst at ING Securities.

"It isn't a great time for Sony in terms of new growth products," he said.

"It's a time where they need to actually cut costs and make things more efficient, squeeze as much money as they can from their cash cows -- such as PlayStation and digital cameras -- in preparation for the next growth spurt."

For the year to March 2004, Sony forecasts a net profit of 50 billion yen, pre-tax profit of 130 billion yen and revenue of 7.4 trillion yen.

The firm will appoint eight new outside directors, including Nissan Motor's president and chief executive Carlos Ghosn.

SPACE.WIRE