Sony (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 (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.