Sony touches 9-year high, buoyed by the PS4
'Spider-Man,' other announcements at industry expo spark investor interest
TOKYO -- Sony stock soared 4% at one point Monday as investors turned their attention to the company's success at turning its video game business into a cash cow with the blockbuster PlayStation 4.
The shares touched a nearly nine-year high of 4,291 yen before closing the day at 4,290 yen, underpinned by a new "Spider-Man" game and other PS4 titles previewed at the Electronic Entertainment Expo, or E3, in the U.S. Sony ranked third in value of trading on the Tokyo Stock Exchange, behind only Nintendo and SoftBank Group.
Sony's share price is increasingly tied to the fortunes of its game business, a former burden that has now become an earnings driver. The segment suffered an operating loss of more than 100 billion yen ($898 million) in the year ended March 2008, when Sony's operating profit reached 475.2 billion yen, close to the 500 billion yen estimate for the current fiscal year. But the business took a turn for the better in 2013, when the PS4 became a worldwide hit on the strength of its graphics. The game segment is forecast with a record 170 billion yen profit this fiscal year, also underpinned by sales of the PlayStation Plus content subscription service.
The enhanced software offerings reflect an effort to "reduce downside risks [next fiscal year]," said Masaru Sugiyama of Goldman Sachs Japan. But with PS4 sales set to fall 10% this fiscal year, many see the game segment's profit declining next year. To sustain the momentum of its shares, Sony plans to focus on the PlayStation Plus service.
And with competition in the video game industry heating up, investors will likely narrow their focus to high performers. Nintendo shares are on the rise, buoyed by the company's Switch system. With a market capitalization of 5.23 trillion yen, Nintendo is closing in on Sony's 5.42 trillion yen. Microsoft will release a new Xbox console this November.