Sony to delay PlayStation 3 until November

updated 1:29 p.m. ET March 15, 2006

TOKYO - Sony will put off the release of its much awaited PlayStation 3 console until November from its planned spring debut because more work is needed on its next-generation DVD technology, the company said Wednesday.

Ken Kutaragi, the head Sony’s video games division, made the announcement at a hastily called news conference after reports of the delay surfaced in the business daily Nihon Keizai Shimbun and other papers.

The PlayStation 3 is critical for Sony Corp.’s profits and brand image, so the delay is a major setback for the Japanese electronics and entertainment company as it struggles to mount a recovery after several years of poor earnings.

The reports sent Sony’s stock tumbling 1.8 percent to 5,470 yen ($46) Wednesday. Kutaragi announced the decision after the close of the Tokyo Stock Exchange.

In the United States, however, Sony’s American depositary shares rose as much as 2.2 percent and finished up 17 cents at $46.68 on the New York Stock Exchange, off a four-year high of about $51 from late January.

Relief that delay isn't worse
U.S. analysts said Sony’s announcement likely alleviated investors’ concerns that the PlayStation 3 wouldn’t reach the U.S. marketplace until 2007. The new timeline means that the PlayStation 3 will hit store shelves simultaneously in Japan, North America and Europe, just in time for Christmas.

“We believe the news will come as a relief to investors who had feared that Sony would not launch the console in Japan until November, followed by a typical four- to five-month lag into the U.S. market,” Brendan McCabe of CIBC World Markets wrote in a research note.

Kutaragi said Sony is still trying to finalize the copyright protection technology and other standards for the Blu-ray DVD disc, the format for PlayStation 3, and next-generation video for the company’s electronics gadgets in the works.

“I’d like to apologize for the delay,” Kutaragi said at a Tokyo hotel. “I have been cautious because many people in various areas are banking on the potential of the next-generation DVD.”

Blu-ray preparations were initially to have been completed by last September, but now won’t be finalized until next month, he said.

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