Sony (NYSE:SNE) has been planning to launch two new gaming consoles in 2012. Sony plans to launch the Vita in December 2011 or the first half of 2012. The Playstation 4 is rumored to launch around the same time. Sony is waiting to counter the next generation of Microsoft (NASDAQ:MSFT) Xboxes that will be launching soon.
Sony has been under intense selling pressure as the company suffered from declining consumer sales across many of its businesses. Sharp currency fluctuations played a role in the company's loss as well. Sony has dropped about 57% so far this year.
I expect Sony to benefit from a strong holiday shopping season this year. Retailers extended hours and launched aggressive price promotions to bring in shoppers this year. I don't expect sales to remain at elevated levels after the shopping season. This could mean slower television sales once again next year.
I believe Sony is in an interesting situation with the potential launch of two new gaming consoles. Many retailers who sold the Playstation 3 when it first launched sold out. Playstation has a strong customer following and should benefit from its base in the next launch. Sony has sold over 51 million Playstation 3 consoles over the last 5 years. This could spell big money for Sony if the Playstation 4 could achieve the same results. I estimate that the Playstation 4 should bring in around $15 billion in sales over 5 years. These figures don't even factor potential Vita sales. These sales should more than offset losses in other business segments. Sony lost about $453 million in the last quarter.
Sony may be setting up a nice double bottom off the $16 area. The weekly chart shows where the double bottom is taking place. Sony last tested this level in 2009.
I was short Sony after the last earnings report but covered most of my position around $17. I closed the rest of my position at break even Wednesday. I'm now bullish on Sony and view pullbacks as opportunities to buy. The stock must remain above $16 in order for me to maintain my bullishness. I'm looking to start a small position on the next pullback that stays above $16. I will place my stop loss order below the key $16 area. This is still a speculative position for me since Sony has yet to confirm the launch date for the Vita and Playstation 4. Be sure to do your research before starting a position.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SNE over the next 72 hours.