Sony Corp. shares fell as much as 2.6 percent on Thursday, hit by another delay in the launch of its PlayStation 3 game console, but outperformed sector peers and the broader market by the end of the day as investors weigh the likely impact of the delay.
Sony, which competes with Microsoft Corp. and Nintendo Co. Ltd. in the nearly $30 billion video game market, said after the market close on Wednesday it would delay the PS3 launch in Europe to March from November, missing the critical Christmas shopping season in a key market.
After hitting a low of 4,920 yen earlier on the day, Sony shares closed down 1.58 percent at 4,970 yen, while Tokyo's electrical machinery index lost 1.96 percent and the Nikkei average fell 1.67 percent.
Sony stuck to its target of shipping 6 million PS3 consoles worldwide by the end of the current business year to March despite the delay in Europe, while cutting by half its shipment target for calendar 2006 to 2 million units.
Its plan to ship 6 million units by the end of this business year is kept unchanged. Therefore, we expect the earnings impact to be minor, Morgan Stanley said in its research note dated Wednesday.
Sony said commercial production of blue laser, a key component for PS3's Blu-ray optical disc drive, has fallen behind the original schedule, forcing the delay in Europe and other regions including Australasia. It stood by its plans for Japan and North American launches in November.
This is the second time Sony has delayed the launch of its latest PlayStation console.
Deutsche Bank analyst Tomohiro Jikihara said Wednesday's news could actually be seen in a positive light because the company reaffirmed its commitment to launching the PS3 in Japan and North America in November as scheduled.
He added that Sony's shares are unlikely to be impacted by the news except for a small immediate fall on the reaction of individual investors.
Still, there is no denying that the latest delay will come as a blow to Sony's PS3 business when it is gearing for a three-way battle with Microsoft and Nintendo for dominance in the next-generation game console market.
This move will put Sony further behind its competitors, at a time when people's expectations toward the console was already cooling down because of the high pricing, Mizuho Securities analyst Takeshi Koyama said. Sony risks selling fewer consoles as a result.
Sony plans to sell a version of the PS3 with a 20-gigabyte hard disk drive for $499 in the United States, $100 higher than Microsoft's Xbox 360. Nintendo will be offering its Wii at $250 or cheaper.
Shares in some Japanese game software makers came under pressure after the news of the delay.
Shares of Capcom Co. Ltd. (9697.T), which will offer Devil May Cry 4 for PS3, fell 1.83 percent to 1,609 yen, and Square Enix Co. Ltd. closed down 3.18 percent at 2,590 yen.