Sony Shares Drop on Report PS3 Delayed Until November (Update3)
March 15 (Bloomberg) -- Shares of Sony Corp., the world's biggest video-game console maker, fell as much as 2 percent after the Nihon Keizai newspaper reported that sales of the PlayStation 3 will be delayed by about six months to November.
The stock fell 1.8 percent to 5,470 yen as of 2:17 p.m. in Tokyo, compared with a 0.4 percent gain in the Nikkei 225 Stock Average. The Nihon Keizai said Sony hasn't resolved details on a copy protection format for its DVD player, preventing a planned release this spring. Sony Computer Entertainment Inc. spokesman Daisuke Nakata declined to comment on the report.
Sony would be a year behind Microsoft Corp., which released its latest Xbox 360 console in the U.S. in November 2005. The PlayStation 3 features Sony's Blu-ray high-definition DVD technology and its fastest processor ever, forming a key part of Chief Executive Howard Stringer's strategy to use entertainment businesses to spur sales of consumer electronics.
``The delay is negative, and the more important question is when they can start sales in the U.S.,'' said Kazuharu Miura, an analyst at Daiwa Institute of Research in Tokyo. ``The Xbox 360 already had one run at the holiday sales last year, and if Sony can't get the PS3 out before year-end, they'll end up ceding two seasons worth of sales to Microsoft.''
Sony Computer Entertainment President Ken Kutaragi will speak at a media conference in Tokyo about its PlayStation business at 3 p.m. today. The company last month said a postponement of the PlayStation 3 couldn't be ruled out.
Kiss Goodbye
``The November launch appears to be only for Japan,'' according to Dominik Maeder, an equity sales trader at HSBC Holdings Plc's brokerage unit in Tokyo. ``Given Sony's track record, you can kiss the overseas Christmas launch goodbye.''
With the PlayStation 2, Sony missed out on the 1999 year- end shopping season to Sega Enterprises Ltd.'s Dreamcast game machine. Still, the PS2 was launched in March 2000, 18 months ahead of Nintendo Co.'s GameCube and almost two years ahead of Microsoft's first Xbox, and outsold all three consoles.
Sony's first two PlayStation game consoles are bestsellers worldwide, with more than 100 million units sold each.
``If they slide too far, they'll find themselves in the same situation as the Xbox did when they launched the PS2 a year before we entered,'' Craig Mundie, Microsoft's chief technical officer, said in an interview from Singapore yesterday. ``That's a hill to climb.''
Shortage
Merrill Lynch & Co.'s Tokyo-based analyst Hitoshi Kuriyama wrote in a report last month that the PlayStation 3 launch may be pushed back to autumn in Japan and 2007 in the U.S., because of reasons that included delays in video chip production, heat emissions problems and a shortage of games.
The PlayStation 3 will be compatible with the Blu-ray disc, which can store at least five times more video, audio and computer files than standard DVDs. The console's Cell chip will also make the PS3 about 35 times faster than its predecessor.
The console will cost about 74,000 yen ($630) to make, with the Cell chip and Blu-ray accounting for more than half of the costs, and Sony will probably sell it for 44,800 yen in Japan and $399 in the U.S., Kuriyama said.
That compares with the Xbox 360's $399 price tag for a console with a hard-disk drive, and $299 for a unit without a drive. Sony's PS3 won't come with a hard-disk drive, which can be used to store music, movies, and other computer files.
Huge Risk
``There clearly would be a huge risk with a delay,'' said Stephen Hall, who helps manage the equivalent of $572 million at Britannic Asset Management in Glasgow, Scotland. ``The fact that the PS3 will include the Blu-ray disc and the Cell chip will also increase the actual production cost of the unit.''
The Blu-ray will have to compete with Toshiba Corp.'s high- definition DVD format, which can store at least four times more data than standard DVDs. Microsoft backs Toshiba's HD DVD format and Chairman Bill Gates last year said future versions of the Xbox 360 may support the HD DVD format.
``It remains to be seen whether the PS3 will be regarded as an entertainment hub, which Howard Stringer wants to do,'' said Amir Anvarzadeh, director of Japanese equity sales at KBC Financial Products in London. A possible delay is ``a hindrance. People want the PS3 to come out regardless of what the media is. They don't care if it's Blu-ray or HD DVD.''
Sony on Jan. 26 forecast an annual profit, reversing a loss forecast, on sales of Bravia televisions and PlayStation Portable video-game players. The company posted a record 168.9 billion yen profit in the quarter ended December, triggering a 14 percent gain in its shares the next trading day.
