Sony shares, valued at around $15 billion or just 3 percent of rival Apple Inc (AAPL.O), this week slipped to a quarter century low, a sign of how the Walkman and PlayStation maker has lost its innovative edge and fallen behind Apple and Samsung Electronics (005930.KS).

Under new CEO Kazuo Hirai, Sony is slashing costs - 10,000 jobs, or 6 percent of the global workforce, will go - in a bid to turn around its struggling TV unit. At a briefing last month, Hirai sketched a future driven by mobile devices such as the Xperia smartphone, gaming and cameras, as well as medical devices and electric car batteries, along with big cost cuts in the TV business that has lost more than $10 billion in 8 years.

The company said on Thursday it expects to sell more than 33 million smartphones this year, up from 22.5 million last year.

"In handsets, without big innovations, Sony will still be a second-tier smartphone market player," said SR Kwon, an industry analyst at Dongbu Securities in Seoul. "I'm just not impressed by Sony smartphones."

"Will Sony get much better as time goes by? I'm not that optimistic. Currency is not the only problem, the bigger problem is that Sony has failed to catch up with consumer trends in TVs and handsets."

Sony expects an operating profit of 180 billion yen in the year to next March, slightly ahead of market estimates, but a rebound from a loss of 67.3 billion yen in the year just ended. It forecast a full-year net profit of 30 billion yen.

"The operating profit forecast isn't far off the level seen two years ago ... This suggests we're on a recovery trend and last year was definitely the bottom," said Kenichi Hirano, operating officer at Tachibana Securities in Tokyo. "But I think not everyone in the market is convinced of this, especially since the company lacks a solid plan to turn around its TV business."

Sony predicted sales of its liquid crystal TVs would fall 11 percent to 17.5 million in the current year, but forecast its losses from the LCD TV business would halve to 80 billion yen.

As TV technology moves on, Samsung reiterated on Thursday it plans to sell organic light emitting display (OLED) TVs from the second half of this year and reckons this will become mainstream TV technology within 2-3 years.

Sony also sees an 11 percent decline in sales this year of its PlayStation games console, to 16 million. Sales of its new Vita handheld games console hit 1.8 million in the previous year, Sony said.

Sony's January-March operating loss of 1.4 billion yen was narrower than the average 10 billion yen loss estimated by five analysts.

Little more than a month into his job as CEO, Hirai has set a target for group sales of 8.5 trillion yen ($106.85 billion) in two years, with an operating margin of more than 5 percent. "This is our only chance to change," he told an April 12 news conference.

He has yet to spell out just how Sony will achieve those mid-term targets, and investors are concerned about Sony's prospects as consumers flock to gadgets made by Samsung and Apple. Since the start of the year, Sony shares have dropped 12 percent, while the benchmark Nikkei 225 index .225 has gained nearly 7 percent.

Ahead of the results on Thursday, Sony shares closed down 1.2 percent at 1,213 yen, while the Nikkei average slipped 0.4 percent.

($1 = 79.5500 Japanese yen)

(This story corrects Vita sales period in paragraph 11)

(Additional reporting by Mari Saito in TOKYO and Hyunjoo Jin and Miyoung Kim in SEOUL; Editing by Edwina Gibbs and Ian Geoghegan)

• A Permanent Economic Emergency