Sony Shares Fall Amid Delay in PlayStation 3 Introduction

Investors in Tokyo weighed the impact of Sony's decision to delay the introduction of its PlayStation 3 console in Europe until March, missing the critical Christmas shopping season. Despite the delay, Sony's shares outperformed sector peers and the broader market by the end of the day. The company's stock has declined 7.3 percent in the past six months, compared with a 1.8 percent gain in the benchmark Nikkei 225.

Key Takeaways:

• Sony shares fell as much as 2.6 percent on Thursday due to the delay in the introduction of the PlayStation 3 console in Europe.
• The company stuck to its target of shipping six million PS3 consoles worldwide by the end of the current business year, despite the delay in Europe.
• Sony cut its shipment target for calendar 2006 to two million units, citing commercial production of blue laser as the reason for the delay.
• The company reaffirmed plans to start sales in November in Japan and North America.
• Howard Stringer, chief executive of Sony, is relying on the PlayStation 3 to revive a company that has lost half its market value in the past six years.
• Investment in the PlayStation 3, priced higher than rival consoles from Microsoft and Nintendo, may be a major drag on profit growth, some investors said.
• Andrew Millward of Henderson Global Investors in Tokyo stated that Sony has underestimated how difficult it is to produce Blu-ray.
• Tomohiro Jikihara, a Deutsche Bank analyst, said that the announcement could be seen in a positive light, as Sony stood by its timetable for starting sales of the PS3 in Japan and North America.
• Takeshi Koyama, an analyst at Mizuho Securities, stated that the delay will put Sony further behind its competitors, at a time when people's expectations toward the console were already cooling down.
• Sony plans to sell a version of the PlayStation 3 with a 20-gigabyte hard disk drive for $499 in the United States, $100 more than Microsoft charges for the Xbox 360.

Statistics:

• Sony's stock declined 2.6 percent on Thursday, compared to a 1.67 percent fall in the Nikkei 225 average.
• The company's stock has declined 7.3 percent in the past six months, compared to a 1.8 percent gain in the benchmark Nikkei 225.
• Sony's shares closed at -4,970, or $42.78, on Thursday.
• Commercial production of blue laser had fallen behind schedule, forcing the delay in Europe and other regions.
• Sony cut its shipment target for calendar 2006 to two million units.

Sources:

• "Sony shares fall amid delay in PlayStation 3 introduction" by TOKYO news reports.
• Morgan Stanley research note dated Wednesday.
• Howard Stringer, chief executive of Sony.
• Andrew Millward of Henderson Global Investors in Tokyo.
• Tomohiro Jikihara, a Deutsche Bank analyst.
• Takeshi Koyama, an analyst at Mizuho Securities.