PlayStation 2 Glitch Gouges Stock
Sony Corp. shares took a gouge on Friday, March 10, 2000 after the company reported it was investigating customer complaints about a glitch in their new PlayStation 2 gaming system. A spokesman for Sony Computer Entertainment (SCE), Sony's game unit, said it was looking into problems associated with the new console's playing of DVDs. The company's shares fell 6.41% to end at ¥26,300 (US$249), extending a seven straight day losing streak that has brought a 22% price drop in the stock. The glitch news came on the same day Microsoft announced it would challenge Sony with the launch of its powerful X-Box gaming system. "It would be embarrassing if Sony found a bug in the player just launched. But it's understandable given the hasty launch. I don't think Sony had enough time for perfect quality control," said Yoshio Imanaka, a Commerz Securities analyst, to Reuters. "It would be costly if Sony had to recall or repair the new player, but this does not mean its top position in the game industry would be shaken. No one bought the PlayStation 2 to watch DVDs," he added. The SCE spokesman said the company was investigating whether the reported technical glitches resulted from problems with the new machines, software or the way users were operating the system. The spokesman did not comment on how long the investigation would take or whether there is a chance that consoles might be recalled. "We would make it public as soon as possible if we find any problem in our hardware. But we need to deal with the case according to the cause of the problems," he said. After hitting a record high of ¥33,900 ($321) on March 1, the Sony fall is seen as a correction of a bloated price. "The PlayStation (2) problem gives the market the best excuse to sell Sony, which was already heading downward," said Hiroyuki Nakai, senior executive officer at Nippon Global Securities' investment research department to Reuters. Since the start of 1999, Sony shares had almost quadrupled, which prompted its president Nobuyuki Idei to warn investors in January, that a share price above ¥20,000 ($189) would be a "bubble about to burst."