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Sony stock slides 2.75 percent on PS3 concerns

Analysts downgrade electronic giant's stock following reports of PS3 malfunctions at TGS and "disappointing" PSP sales.

The PlayStation 3 launch is now just over six weeks away, and Sony Corp. stockholders are apparently getting nervous. Today, the Japanese electronic giant's share price slid 130 yen ($1.11) to 4,600 yen ($38.98) on the Tokyo Stock Exchange, a decline of 2.75 percent.

According to several news-service reports, the stock drop came after two major analysts downgraded Sony's stock on concerns about its gaming division, Sony Computer Entertainment. "We have adopted a cautious view of the impact of the [Sony] game business on the electronics business this term,'' Goldman Sachs analyst Yuji Fujimori told Bloomberg. Fujimori downgraded Sony's rating from "buy" to "neutral" citing "confusion over the release of PlayStation 3 and concerns [about] disappointing sales of [the] PlayStation Portable," according to the Associated Press.

Another Tokyo-based analyst, Macquarie Equities' David Gibson, went one step further. He issued a report expressing concern that many of the 200-plus PS3s on the floor of the Tokyo Game Show "operated erratically and had to be repeatedly reset," according to the AP.

"While the reason for this is unknown, we suspect it may be due to overheating as a result of enclosing the units and the high temperatures at the venue," Gibson said. "We are concerned that such a problem has occurred so close to full production and is clearly negative news for the company."

In its defense, Sony said the PS3 failures were caused by unusually high temperatures created by having many of the next-gen consoles operating in close proximity to each other. "It's not a problem with the PlayStation 3 unit itself," Sony spokeswoman Nanako Kato told the AP. "For a normal player at home, there shouldn't be any problem."

The downgrades come at a bad time for Sony, which is already coping with a massive recall of laptop batteries it manufactured. On Friday, Dell announced that it was increasing the recall of Sony batteries used in its systems from 4.1 million units to 4.2 million units.

On the game front, the company recently had to delay the PS3's European launch to March 2007 and cut day-one inventory of the console to 100,000 units in Japan and 400,000 units in North America. The company says it will still ship 2 million to 2.4 million PS3s by the end of the year.

463 Comments

  • xophaser

    Posted Oct 8, 2006 10:45 pm GMT

    If you were a business person, you would buy low and sale high. So, buy Sony's Stock now and sell it after a year. You pretty much made enough money to say you got a PS3 for free. Sony has been around for a while not like dot.com stock.

  • _Sam_

    Posted Oct 6, 2006 5:40 pm GMT

    I hope there aren't any problems

  • Chiyou

    Posted Oct 6, 2006 2:10 pm GMT

    this was bound to happen, slowly sony will lose all its respect its gathered from the game community just like the game giants before them when they went from the super nintendo to the crappy nintendo 64 or the sega genesis to the sega cd/saturn (dreamcast rocked but unfortunetly the saturns failure overshadowed its success) now its sony with the playstation 2 and the unfortunate mystake of the playstation 3 next it will be the xbox with the unfortunate 360 2 or whatever the hell they'll call it. and then Nintendo will shine again and fail again just starting the whole process over again. i'm quite happy with my psp... its unfortunate that its doing so bad! but hey i have both the ds and the psp! yay!

  • ewjim

    Posted Oct 6, 2006 3:05 am GMT

    Bad & sad news...

  • tmacyao111

    Posted Oct 5, 2006 5:32 pm GMT

    They just need to get those good psp games out there to make up for the loss, c'mon sony, you can do it.

  • perfect_chao

    Posted Oct 5, 2006 4:41 pm GMT

    so much for the precious cell.

  • Bigboss232

    Posted Oct 5, 2006 3:36 pm GMT

    psp just has to get vice city stories and portable ops out there come on sony get it together ken kutiraga or whoever is not brihgt have blue ray has add on so u can sell the machine at the same price has a 360

  • cjcr_alexandru

    Posted Oct 5, 2006 10:28 am GMT

    Maybe Sony stock will rise 2.75 (or more) after the release of PS3. Anyway Sony is a pretty big company and I don't think this affects them very much... yet.

  • Hekynn

    Posted Oct 5, 2006 9:54 am GMT

    They need to lower the price of the console if they want to get more customers

  • Andron666

    Posted Oct 5, 2006 5:23 am GMT

    Hopeful thinking won't brake Sony's back.

    They have been in the game too long to mess this up as bad as others have.

  • anamnawshad

    Posted Oct 5, 2006 2:40 am GMT

    More bad news for P$-3.........

  • dblakenz

    Posted Oct 5, 2006 12:32 am GMT

    Well could even tho gamespot dont always seem pro ps3 at least they got 2sides to the story. I was just at G4TV (i dont know why i was there eather since they seem to be the most ps3 hating site around!) and this is there article: "The potential problems with the PlayStation 3 and poor PSP sales are bigger issues than just haters on message boards ragging on Sony: Yesterday the inscrutable Japanese electronic firm's stock slide nearly 3% on worries about the success of the PlayStation 3 and poor sales figures of the PSP.

    Japanese analysts downgraded their stock from "buy" to "neutral" amid concerns about Sony's gaming division.

    Another problem cited: malfunctioning units on the floor at the Tokyo Game show. Sony says the overheating was caused by the consoles being in close proximity to each other, and not by a flaw in the machine themselves. Still, very troubling news given the launch date of the system is only a month and a half away"

    At least gamespot has an official comment from sony. Fricken hate G4.
    Any ways pritty much anything over heats depending on the conditions, and from what i hear TGS was a pritty hot place, so being stuck inside a little plastic box for 12 hours a day in a room with no AC and a million people will probably do it!

  • gt3killer

    Posted Oct 5, 2006 12:08 am GMT

    Grim bee While i think the 360 has some good games, but the games and companies I liked since the 8-bit Nintendo era all have ended up developing for PS of course with the exception of Nintendo 1st party. Obivously all the good Japanese developers are on board with Sony. Until that changes the PS3 and Wii will be my favorite systems because of the heavy Japanese support. Until MS gets really strong Japanese support I'll wait. Until then I can just go over to friends and play the 360. I would agrue that the 360 has any real good games I WANT TO PLAY, BUT we all have different taste so it's no use in talking trash about games ppl like to enjoy thats just dumb. So lets not go there.

  • ziutek2

    Posted Oct 4, 2006 11:27 pm GMT

    In other news
    www.eurogamer.net/article.php?article_id=68372
    "Sony denies PS3 overheating problems. Worked 'flawlessly' at TGS."

    The pictures on kotaku of guys using 30cm fans to cool PS3 are MIRAGE.
    www.kotaku.com/assets/resources/2006/09/powered_by_namco.jpg

    @mirage is of course from heat - no not from PS3 units no no ,it's from standing near X360's

    www.kotaku.com/gaming/xbox-360/ps3-overheating-problems-204897.php
    www.kotaku.com/gaming/ridge-racer-7/tgs06-ridge-racer-7--too-hot-for-tgs-202609.php
    www.kotaku.com/gaming/sony/tgs06-armored-core-4-is-a-real-system-crasher-202827.php

    PS3 stand:
    *This is not the overheating console you looking for. Move along!*

    PS3 *does not overheat* that why it need extra cooling:
    www.kotaku.com/gaming/intercooler/xbox-360-intercooler-comes-to-ps3-205242.php
    --------------
    Tommorow there will be annoucement that Sony bateries DOES NOT explode:
    www.theinquirer.net/images/articles/dell%20banger1.jpg

  • daqua_99

    Posted Oct 4, 2006 9:57 pm GMT

    Lol ... I remeber the Cows saying there would not be the problems for the PS3 as the 360 ... looks like there might ...

  • uofrochester

    Posted Oct 4, 2006 8:47 pm GMT

    Thanks for the humor GrimBee!

  • aldrenar47

    Posted Oct 4, 2006 8:13 pm GMT

    Meltstation 3

  • n2Deepeth

    Posted Oct 4, 2006 5:42 pm GMT

    Hehe, I like some of the puns:


    "The PS3's going to be an incredibly HOT item this holiday season."

  • n2Deepeth

    Posted Oct 4, 2006 5:38 pm GMT

    It's one thing after another with Sony. I guess it's karma catching up for trying to deceive Hiroshi Yamauchi back in the 90's, as well as having so many faulty consoles in the past, not to mention bad customer service.

  • LoWpS

    Posted Oct 4, 2006 5:28 pm GMT

    hehehehehe... TOO BAD FOR SONY!!!!!! TREMBLE IN FEAR AT NINTENDO'S "LOW END GIMMICK"!!!!! MUAHAHAHAHAHAHAHA!!!

  • yawannataco

    Posted Oct 4, 2006 5:28 pm GMT

    At some point you really have to feel sorry for Sony. This launch is just painful to watch...

  • Riverwolf007

    Posted Oct 4, 2006 5:03 pm GMT

    Dont want it to overheat then dont make it look exactly like a george forman grill standing on one end.

  • frasermoo

    Posted Oct 4, 2006 5:02 pm GMT

    NeoGohan324

    I hear what you are saying mate. The answer is, I don't stockpile. I have worked my way through alot of the consoles but not owned them at the same time. I buy and sell consoles on ebay, usually keeping them for 6 months to a year. I've just gone back to PS2 for a third time to catch up with SOTC, Psychonauts etc.. and looks like I will have to get Okami now as well. Then it's onto a 360.... or maybe a Wii for Zelda....

    Also, I never keep games. Finish it, sell it.

  • GrimBee

    Posted Oct 4, 2006 4:46 pm GMT

    puppiemaster. go and get some figures to prove this. Toyota sell slightly less cars than GM.
    This means GM is the biggest company. Its more widespread, has more car make aliases, and it makes more cars than toyota do.
    Look, go get the figures!

  • NeoGohan324

    Posted Oct 4, 2006 4:43 pm GMT

    Frasermoo:
    Competition is good to a point. It becomes bad for the consumer when his favorite series are split up among 3-6 different pieces of hardware. To enjoy one's favorite series, one would have to drop nearly 2k after taxes, and thats just for the hardware. ($500-PS3, $400-360, $250-Wii, $200-PSP, $130-DS, $500-gaming PC) Which brings us to your next point...

    Perhaps back in the day stockpiling systems was possible. But even with a job and living on my own, there's no way I could factor in $2,000 for video games hardware, plus an extra couple grand for games. My budget is too tight, with rent, food, bills, and other things I want to do in life. I can't buy every system I want like you imply. Even if I could, I don't want to shell out the cash. The way I see it, if Sony dies, then its exclusives will go to the 360 and I've saved $800 and can still enjoy all the games I would before if Sony had split up the developers.

  • puppiemaster

    Posted Oct 4, 2006 4:41 pm GMT

    GrimBee
    Drewt003... ok ok you win... NOT!

    Do a little wiki research once i a while

    "9.17 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Oldsmobile (now defunct), Opel, Pontiac, Saab, Saturn and Vauxhall. "

    Er.. anyways. It's the largest automotobile company.. ever. Still is.

    ACTUALLY TOYOTA IS THE BIGGEST CAR COMPANY IN THE WORLD and they have the biggest single car plant in the world, in america as well!! I work for Honda and as the 4th Biggest Car Company we still sell in excess of 11M cars a year.

    In our TQM meetings we always pride ourselves in the substandard quality of american cars, great on straight roads, but change gear or turn a corner and you're screwed. Means americans buy more of our cars!!!

  • King_Dodongo

    Posted Oct 4, 2006 4:02 pm GMT

    I don't see the big deal on that PS3

  • GrimBee

    Posted Oct 4, 2006 3:51 pm GMT

    Can't believe nobody hasn't said anything like this.. but here is some good old brittish humour for ya -

    "the ps3 will sell like.. HOT..cakes" (ahhhhehehe)

    "The ps3 is "hot"" LOL

    "it looks and FEELS like something george foreman could be proud of"

    when someone dies or has some bad news in the media industry, usually there are jokes flying around about them.

    With the gaming industry though, it almost takes itself too serious. Nobody makes jokes or even extracts the slightest amount of wit about some bad news. Its like "uh oh! sony dead!" and silly things like that.

    I wish the gaming industry had a better sense of humour, would make some bad news a little more bareable. I miss "the last word" on gamespot, it was like one of the only humerous things on gamespot which said something funny about bad news.

    I think the ps3 will sell well. Its definately not going to be a ps2 beater though. Maybe it will if you bashed a ps2 with a ps3 though.. HAH! geddit? ps2 beater?

    HAH! (hey.. maybe THATS why gamers arent funny!)

  • LordelX

    Posted Oct 4, 2006 3:46 pm GMT

    No #1 spot, goodbye Sony. It was good to have you there for a decade or so, but now it's time to pass the torch. Being #2 or #3 may have the effect of you increasing the quality of your products, something you sorely need to do.

  • sean987

    Posted Oct 4, 2006 3:27 pm GMT

    it looks like to me that the ps3 is having more problems then the xbox 360 did and sony is just denying it to make themselves look good,Sony is in a bad position right now, with bad launch titles for there system and gears of war about to land a bomb on there heads,they are going to need to find something that will make there system able to compete with xbox 360 and i dont see how they can at this rate.

  • DS_fan_atic

    Posted Oct 4, 2006 3:22 pm GMT

    TOKYO — It has been an annus horribilis for Sony.

    The Japanese electronics company has been hit with a string of embarrassments that have dented its reputation for quality.

    Already reeling from a string of laptop battery recalls, Sony Corp. saw its shares drop nearly three per cent Tuesday amid fresh worries about the upcoming release of its much-anticipated PlayStation 3 video game console.

    Sony has already twice delayed the product’s launch amid intensifying competition from rivals Microsoft and Nintendo.

    The PlayStation 3 will hit stores in Japan on Nov. 11 and in the United States on Nov. 17. In Europe, they won’t go on sale until March, four months later than planned.

    Investors worried about the product after Macquarie Equities analyst David Gibson wrote in a report that PlayStation 3 units on display at the Tokyo Game Show about 10 days ago operated erratically and had to be repeatedly reset.

    "While the reason for this is unknown, we suspect it may be due to overheating as a result of enclosing the units and the high temperatures at the venue," Gibson wrote in the report Monday. "We are concerned that such a problem has occurred so close to full production and is clearly negative news for the company."

    Earlier in the day, investment firm Goldman Sachs Group Inc. lowered Sony’s stock rating to "neutral" from "buy," citing confusion over the release of PlayStation 3 and concerns that disappointing sales of the PlayStation Portable may weigh on its earnings in electronics operations more heavily than expected.

    Sony denied that there was any technical problem with the PlayStation 3.

    But the company’s stock tumbled 130 yen (US$1.11), or 2.75 per cent, to 4,600 yen ($38.98 ) on the Tokyo Stock Exchange.

    The problems come in the midst of Sony’s widely publicized turnaround effort under its first foreign chief executive Howard Stringer.

    It has been hit with mounting extra costs after some seven million of its laptop batteries have been recalled on fears they could catch fire.

    Desperately trying to catch up to Apple Computer Inc.’s IPod in portable music players, Sony said last month it was delaying the Japanese release of its new digital Walkman by a week until Sept. 23 because of a malfunction of an unspecified part.

    It is also fighting to make a comeback in flat-panel TVs after falling badly behind Samsung Electronics Co. of South Korea and other rivals.

    Sony shares have plunged over 20 per cent since April, before the company’s battery recall woes. At the start of the year, shares were at 4,730 yen.

    Sony spokeswoman Nanako Kato said any problems at the Tokyo Game Show, where Sony, Microsoft and Nintendo showed off rival offerings under the same roof, were likely caused by one-of-a-kind temperature irregularities.

    About 200 PlayStation 3 units were clustered together in close proximity and housed in kiosks that concentrated the heat generated by their processors and provided poor ventilation, Kato said. Overheating under such circumstances is a common affliction at trade shows, afflicting not just Sony products but those of its competitors, she said.

    http://www.herald.ns.ca/Business/532239.html

    I read this in the news today...a smile crept across my face

  • mrmagoo2

    Posted Oct 4, 2006 3:10 pm GMT

    Frasermoo,youre my new hero.

  • jameston80

    Posted Oct 4, 2006 2:55 pm GMT

    NEWSFLASH: This just in, the PS3 will now cook your eggs in the morning along with your bacon, and in the afternoon you can cook your burgers too.

  • gamerchikrpg

    Posted Oct 4, 2006 1:54 pm GMT

    I understand why it's gone down, but is that percentage really a big deal? I mean compared to what they already make on all the other products they overprice...

    tv's *cough*

  • iluvrice

    Posted Oct 4, 2006 1:41 pm GMT

    "I'm expecting it to. The first batch of consoles to roll off the assembly line will be crap. Every console is like that in the beginning. There will always be a problem until Sony can figure out what they did wrong and fix it."

    This expectation of broken first batch consoles didn't exist UNTIL Sony started making their built like crap systems. My Sega CD, Saturn, SNES all worked fine. My Dreamcast never gave me any problems. ONLY the two PS's and Xbox's soon died after launch and at least MS has the decency to quickly replace the broken systems. It took Sony years and a class action lawsuit before they started sending out $20 vouchers to the suckers who bought a launch system. I just hope whoever purchases my $1200 PS3 doesn't leave bad feedback when his PS3 dies on him.

  • h4xx0rz

    Posted Oct 4, 2006 1:31 pm GMT

    What really irks me is that Sony does not acknowledge its problems when they are found out. Well, at least not with dignity. They will admit problems when it comes down to numbers and facts, but even then they still have that high-and-mighty mentality (called hubris. Look it up if you don't know that word, it's a great addition to any vocabulary and it impresses people) But I digress. Sony should not find excuses why NOT to do something, rather, they should find excuses for why they SHOULD do something.

  • Japster19981

    Posted Oct 4, 2006 1:17 pm GMT

    I wonder whats going to happen the weekend of Nov. 17th.

    Sony fanboys will get their new shiny PS3 and then MS fanboys will jeer.
    Something akin to Pro-Life protesters in front of an Abortion clinic.

    Then a large amount of MS Fanboys will purchase a PS3 and begin to trashtalk, or at least they claim they purchased one.

    Wii will be a huge success, and won't take any flak for it, how can they? They're the original company which everyone loves.

    And then the fate of nations will lie in the balance...(why not).

    PS. I agree with Frasermoo, at least on the unbias standpoint.

  • jonfigs

    Posted Oct 4, 2006 1:10 pm GMT

    I was the ultimate Sony Fanboy up until a few months ago. Sony phone, Sony HDTV, sony Viao, Sony Cybershot, PSP, PS2, hell I even have a Sony MD player collecting dust. Now I see Sony for who they really are, greedy and lost touch with what made them great so many years ago. The lost the music player wars, computer wars, TV's don't overwhelm anyone, and now its time to lose the console wars. Face it guys Sony's reign is over, Nintendo will outsell everyone, and MS will gain huge marketshare over the next few years. Will the PS3 sell, yes, will it do well, depends, will it be another PS2, PS1, absolutely not, never. I'm actually kind of glad, now if the same fate would befall EA games.

  • Dualshockin

    Posted Oct 4, 2006 12:50 pm GMT

    LOL,this article is supposed to stop Sony from taking it's throne again?
    Pitiful.

  • michael31303

    Posted Oct 4, 2006 12:46 pm GMT

    LMFAO: Yeah, like nobody saw this coming!

  • johndoe1893

    Posted Oct 4, 2006 12:30 pm GMT

    efg7721
    The ps3 might be overheating but ill still buy it.

    Proof that Sony has turned its consumers into zombies who will buy anything.

  • efg7721

    Posted Oct 4, 2006 12:22 pm GMT

    The ps3 might be overheating but ill still buy it.

  • jedimaster1971

    Posted Oct 4, 2006 12:15 pm GMT

    it will have problems, like all new electronics. we'll just have to see what sony does about it. anyway the sony fanboys will defend the 360 boys will attack. what else is new.

  • frasermoo

    Posted Oct 4, 2006 12:12 pm GMT

    I hope none of the platforms fail. Competition is good for the consumer. It provides better choice and better prices, and I love the opportunity to play good games no matter what system I am using.

    Fanboys have no valid existence IMO because they don't really exercise consumer power. Most fanboys have their console bought by their mom and big themselves up by pretending they have 'da best' system. Well wait til you get a job and can buy any system you want. Not only do you stop being a fanboy but you suddenly realise what a geekazoid you are and start the damage limitation on your image so you can get the chicks.

    I should know. Been there, done that.

  • javajoe96work

    Posted Oct 4, 2006 12:07 pm GMT

    lol fanboys, it cracks me up with the xbox 1.5 that everone throws around. Cause apparantly that means that all microsoft needed to compete with the ps3 was a .5 increase. NICE

  • K1LLSWITCH

    Posted Oct 4, 2006 12:03 pm GMT

    WolfSkill5544
    "We will see if the PS3 has the same over heating problem as the 360."

    I'm expecting it to. The first batch of consoles to roll off the assembly line will be crap. Every console is like that in the beginning. There will always be a problem until Sony can figure out what they did wrong and fix it. What Sony did wrong with the PS2 was that they didn't notice the problem until everyone had a console. By then it was too late. So when the consoles started to break down there was an outcry throughout the gaming community.

    The PS3 is using brand new technology. Any company would be having problems as Sony is having right now because everything is so new. It's expected. But what is expected is a quick recovery from these mistakes before launch.

  • ralphikari

    Posted Oct 4, 2006 12:02 pm GMT

    "I don't want potential! I want the goods! Show me teh money!!!" - Jason

  • xelloss88

    Posted Oct 4, 2006 11:58 am GMT

    Not looking good for them, they shouldn't of slacked off so much in development thinking they will for sure be the best. Its kicking them in the face right now.

  • WolfSkill5544

    Posted Oct 4, 2006 11:53 am GMT

    We will see if the PS3 has the same over heating problem as the 360.

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