Sony PlayStation 3 Woes Weigh on Stock

Sony shares on Tuesday fell 2.7 percent to $39.09—at a time when the Nikkei Stock Average of 225 firms remained relatively static—due to investors’ concerns over a potential delay of the Japanese electronics giant’s much-anticipated Sony PlayStation 3 gaming console, as well as a downgrade in ratings, The Wall Street Journal reports.

Sony Headquarters

While on display at the Tokyo Game Show event last week, Sony’s PlayStation 3 experienced technical difficulties that called for the machines to be restarted a number of times, David Gibson, a Macquarie Securities analyst, wrote in a Monday report, according to the Journal.

Gibson said he thinks the console’s issues at the Tokyo Game Show event had to do with “overheating as a result of enclosing the units and the high temperatures at the venue,” the Journal reports.

Sony on Tuesday said it had not heard of such issues with its PlayStation 3, according to the Journal. But investors were still hesitant. On top of the decrease in stock value, Goldman Sachs downgraded Sony from a “buy” rating to a “neutral” on mixed reports of when the console would hit retailers, as well as less-than-strong sales of its PlayStation Portable device, the Journal reports.

Sony has come upon tough times in recent days, with a handful of large PC makers launching recalls of batteries with Sony-made fuel cells, and last month’s announced PlayStation 3 launch delay in Europe, according to the Journal.

Dell, the world’s largest producer of PCs, was first to launch a battery recall, requesting that 4.1 million Sony-made batteries be returned, and not long afterward, Apple Computer said it would follow suit with a recall of 1.8 million batteries. A number of additional PC makers, including Lenovo and Toshiba, among others, have issued similar recalls. As a result, Sony launched its own global battery exchange program. 

In September, production of an important part of the PlayStation 3 console hindered the company’s progress toward completion, and it said it would delay its European launch by four months, missing the important holiday sales season, the Journal reports.

Nintendo Wii

Over the past few years, revenue derived from sales of Sony gaming consoles has made up more than 65 percent of its yearly operating profit, according to the Journal; but Microsoft’s Xbox 360 and the upcoming system from Nintendo, dubbed Wii, are sure to give Sony a run for its money. Some experts are already predicting that Nintendo Wii could take off in the consumer gaming space at the expense of PlayStation 3.

The console is slated for release in Japan on Nov. 11 and in the United States on Nov. 17, the Journal reports. Nintendo Wii will hit U.S. retailers on Nov. 19 and Japanese stores on Dec. 2, and it will carry a price tag of $250—significantly lower than Sony plans to sell PlayStation 3 for.

Since last Wednesday, Sony shares have dropped by 5.3 percent, according to the Journal.

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Experts: Nintendo Could Beat Sony in Console War

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