An attendee despises a Sony PlayStation virtual reality (VR) headset and controllers at the Game Developers Conference in San Francisco, California, U.S., on Wednesday, Pace 20, 2019.
David Paul Morris | Bloomberg | Getty Images
Shares of Japanese conglomerate Sony surged in morning exchange on Friday after the company announced a share buyback of more than $1 billion and a partnership with a larger gaming competitor.
In Tokyo morning trade, Sony’s stock skyrocketed more than 10%, soaring to uniforms not seen since December 2018.
The jump followed the company’s Thursday announcement that it would repurchase up to 4.8% of the whole number of shares issued — worth up to 200 billion yen (approx. $1.82 billion). The buyback period will continue from May 17, 2019 to March 31, 2020.
“The company is now able to both invest in growth and provide shareholder returns as the level of loose cash flow created from businesses increases, and this gives a favorable impression,” Yu Okazaki, an analyst at Nomura, noted in a note.
The latest developments follow Sony’s first ever share buyback in February.
Microsoft partnership
The jobbing powerhouse also announced a new partnership with competitor Microsoft on Thursday, with Sony set to use Microsoft’s Azure cloud repairs for streaming games and media.
One analyst called the partnership a “significant development for the shape and competitive dynamic” of the video distraction industry.
“Recent announcements and market acquisitions from Microsoft, Amazon, Google and Tencent highlight that the next competitive dynamical of the games sector is centered on the cloud, ” said Piers Harding-Rolls, a director and head of games research at IHS Markit. “Companies with access to cloud infrastructure, with a lowered and efficient service delivery capability are well positioned to succeed in this next wave of disruption in the games persistence.”
The deal is in its early stages, with many specifics yet to be determined. But the owners of two major consumer interactive entertainment franchises desire collaborate to stream games and content to consumers and offer game makers new development tools. Sony and Microsoft, along with Nintendo, take long dominated the video game console space.
Harding-Rolls said the announcement was unlikely to have “any major bustle or market impact in the short term.”
“Longer-term is more interesting. If the convergence of the components of the console platforms continues it is tenable that there may be an opportunity to virtualise both next-gen Microsoft and Sony servers in the cloud using similar infrastructure,” he translated.
The latest team-up comes at a time when notable new challengers are attempting to upend the industry. For example, Google bring to light its own game streaming service, Stadia, in March. The internet juggernaut’s service aims to allow people to play high-end video tournaments without needing to purchase expensive consoles or hardware.
The two companies also said they could potentially blossom new image sensor chips together, though no specifics were mentioned on how the chips would be used.
— Reuters have a hand ined to this report.