Sony (NYSE: SNE - News) on Wednesday pledged to turn around its troubled video game and television businesses in the coming year as it forecast an aggressive 20 per cent jump in annual earnings.

The Japanese electronics and entertainment group - which has missed several sales and profit goals during the three-year tenure of Sir Howard Stringer, chief executive - said operating profit would rise to Y450bn in the 12 months to March 2009.

Last year, it missed the target for a 5 per cent operating margin.

Sony said it would put an end to losses at the video game and television operations by cutting production costs and, in the case of TVs, ramping up sales. These two units are the cornerstones of the Sony brand but last year, the games division lost Y125bn while the television business lost Y73bn.

In its most bullish forecast, Sony said it expected to sell 17m of its Bravia liquid crystal display TVs in the coming year, an increase of 7m units. It said it would reduce production costs by standardising panel and chassis designs and roll out lower-end models to broaden its market share.

Pelham Smithers, an analyst at Pali International, said the target could be "controversial" given Sony's problems in sourcing LCD panels in the past. The company is preparing to invest $1bn in rival Sharp's newest display factory in an attempt to diversify its supply chain.

"They're obviously hoping the market will stay loose and panel prices will fall further," he said.

Sony was more cautious on the outlook for its PlayStation3 video game console, which has been soundly outsold by the cheaper Wii machine from rival Nintendo. Sony projected sales of 10m PS3 units this year, up just 8 per cent and below the company's initial sales target for last year.

Sony narrowed the sales gap with Nintendo in the second half of last year by launching a cheaper, lower-end PS3 model. But Nobuyuki Oneda, finance director, said Sony did not plan to cut prices further and would focus on generating more revenue from the PS3 software and networking services.

Sony's less aggressive stance on the sale of PS3 consoles will, paradoxically, help the games division achieve profitability because Sony takes a loss on each of the costly-to-make units it sells.

But one analyst warned that Sony could risk alienating the third-party software designers on which it depends to produce attractive games titles if it shied away from increasing its customer base. "Software makers will feel betrayed," he said. "It's a problem for the future."

Sony reported a Y4.7bn quarterly operating loss as a slumping Japanese stock market forced it to write down the value of shares held by its life insurance arm.

For the year just ended, Sony said operating profit increased five-fold from a low base the previous year to Y369bn. Earnings were boosted by sales of assets including land on the site of a former headquarters building.

Sony expect the finance business, part of which was sold in an initial public offering last year, to rebound in the year ahead following the writedown.