Summary: Ken Kutaragi, developer of Sony Corp.'s PlayStation game console, stepped down from management of the unit after production delays have forced the company to slash shipment targets. Kaz Hirai, head of the U.S. game division, will take over as president of Sony Computer Entertainment. Sony CEO Howard Stringer says PlayStation 3 is "the most important product in the Sony Group," and is counting on PS3 sales to revive Sony's slumping shares, which have lost almost half their value in the past 6 years. The company likely missed its goal of having 400,000 players on sale in the U.S. Nov. 17, analysts said. On Oct. 20 Sony cut its income forecast to a five-year low of 80 billion yen ($688 million), down from an earlier estimate of 130 billion yen, due to a PlayStation 3 price cut and its battery recall, the largest in the history of consumer electronics. According to one pundit, Kutaragi's demotion signals that PlayStation 3 will be Sony's last console: Yuta Sakurai, an analyst at Nomura, believes that dropping an engineer like Kutaragi from day-to-day management of PlayStation is a sign Sony is shifting its focus from hardware to software. Sony's American depositary receipts closed down $0.10 to $39.41, and have fallen 3.4 percent this year. Each ADR is worth one ordinary share.
Related links: Media coverage: Financial Times, NY Times. Commentary: Tips on Buying a New Gaming Console • An Ugly Firsthand Account of Sony's PS3 Launch in Tokyo • Nintendo Takes an Early Lead Against Sony. Conference call transcripts: Sony F2Q06
Potentially impacted stocks and ETFs: Sony Corp. (SNE), Microsoft Corp. (MSFT) • ETFs: BLDRS Asia 50 ADR Index (ADRA)
Seeking Alpha is not affiliated with Bloomberg.