Sony, Toshiba Discuss LCD Merger to Revamp Profits

Japan's Sony (NYSE:SNE) and Toshiba are in talks to combine their small and mid-size liquid-crystal display panel businesses in an effort to boost competitiveness, sources told Reuters on Tuesday.

The companies are also reportedly discussing whether to allow Japans government-backed investment fund Innovation Network Corp. to invest about 100 billion yen, or $1.25 billion, for a stake in the new combined LCD business.

Sony has been on the haunt for profit drivers ever since the March 11 earthquake and tsunami in Japan hindered its operations and a massive security breach caused the company to shut its popular PlayStation network for weeks.

The tech company has been sitting in the red in its core TV business for seven straight years. In the quarter ended March 31, Sony reported a loss of $4.7 billion, while sales dropped about 8% to $19.3 billion. The fiscal 2010 loss of $3.2 billion was its biggest in 16 years.

For this fiscal year, Sony forecasted a profit of 80 billion yen, or about $975.6 million, though some analysts believed it to be too robust as the company continues to reel from the security breach and horrific disaster.