* Sony Q3 op profit 137.5 bln yen vs 127 bln yen consensus
* Sony TV profits tank, absorbing soaring earnings from games
* Sony cuts revenue forecast by 3 pct on weaker TV sales
* Sharp Q3 profits rise on brisk TV sales, keeps forecasts
* Sony shares end up 0.7 pct before results, Sharp -3.1 pct
By Isabel Reynolds and James Topham
TOKYO, Feb 3 (Reuters) - Sony Corp's lack of hit products and a price war for televisions is keeping a lid on earnings prospects at the Japanese consumer electronics giant, despite a boost in profits from its games division.
While Sony's operating profits fell 5.9 percent in the third quarter, rival Sharp Corp saw a 9.5 percent rise in profit as its TV sales, heavily focused on the domestic market, spiked up ahead of the reduction of Japanese government subsidies.
Sony, which also competes with Samsung Electronics and LG Electronics in televisions and Canon Inc , and Nikon in digital cameras, has been struggling to keep pace with rivals in terms of profits or products.
Since CEO Howard Stringer took the helm in 2005, the company's share price has fallen by a quarter and Sony has failed to replicate its early successes with the likes of the Walkman and PlayStation game console.
While October-December earnings at both Sony and Sharp exceeded market expectations, analysts said they remained well behind major international players such as Apple Inc in developing hot new products.
"Sony hasn't even come up with its own tablet, and is already a year behind Apple," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments in Tokyo. "It's not a company that has the appeal of a fresh and innovative powerhouse.
The results came a week after Sony unveiled a new portable games device, the Next Generation Portable (NGP), aiming to compete with Nintendo Co Ltd and fend off competition from Apple's iPhone.
The NGP, announced alongside a plan to make PlayStation games available on other makers' Android-based mobile devices, was generally well received, but analysts said its specifications would likely make it more expensive than Nintendo's DS, potentially deterring some consumers.
Sony reported an operating profit of 137.52 billion yen ($1.68 billion) versus 146.1 billion yen a year ago, beating an average quarterly estimate of 127 billion yen in a poll of eight analysts by Thomson Reuters I/B/E/S.
"In this strong-yen environment, we see this as a pretty healthy result," Chief Financial Officer Masaru Kato told reporters.
"We are getting stronger, but we feel we are still only part-way there," he added.
The maker of Vaio PCs and Bravia TVs left its full-year operating profit forecast unchanged at 200 billion yen, compared with a consensus estimate of 217 billion yen in a poll of 23 analysts by Thomson Reuters I/B/E/S.
It cut its annual revenue forecast by 3 percent to 7.2 trillion yen citing lower-than-expected sales in the consumer, professional, and devices segment, which includes LCD TVs.
Operating income in that segment dropped by almost half in the third quarter, while the profit more than doubled in the network products and service division, which includes games, partly on brisk sales of the latest version of Gran Turismo motor racing game, Sony said.
Sony cut its forecast for sales of TVs in the full year to March 31 to 23 million units from the previous 25 million, while it kept its forecast for PS3 game console sales unchanged at 15 million units.
SHARP THRIVES ON TV SALES
Sharp's October-December operating profit grew 9.5 percent to 23.0 billion yen, slightly better than the 21.9 billion yen estimate in a poll of five analysts by Thomson Reuters I/B/E/S.
The company benefited from increased sales in Japan for a wide range of energy-efficient consumer electronics ahead of a cut in government subsidies from December, but overseas earnings were hurt by a strong yen and stiff foreign competition.
The manufacturer of Aquos LCD TVs kept its operating profit forecast at 90 billion yen for the year to March, higher than the consensus of 84.1 billion yen in a poll of 23 analysts.
Sharp, which makes a slew of electronics products and their components from audio systems to solar cells, had lowered its annual profit forecast by a quarter in October, citing a stronger yen and weaker demand for LCD panels.
Shares in Sharp have risen 3 percent so far this year through Wednesday, outperforming a 1.7 percent rise in the Tokyo stock market's electrical machinery index .
Sony has fallen 21 percent since a high reached on March 23 last year, largely reflecting the yen's rise against the dollar and euro , which eats into offshore earnings.
In contrast, shares in Samsung hit an all-time high late last month on an expected rebound after hitting its worst profit in six quarters.
(Editing by Lincoln Feast)