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11:48 GMT, Monday, 26 November 2007

Dubai-run fund buys Sony shares

Employee in Japanese shop holding Playstation 3 console

An investment firm owned by the government of Dubai has said it has bought a "substantial stake" in Sony.

Dubai International Capital would not disclose the value of the investment, but if it is larger than 5% it will have to be reported to regulators.

A 3% stake would cost about $1.5bn (£724m) at Sony's current share price.

It marks the first time the Dubai fund has invested in Japan and reflects a wider trend of oil-rich Gulf states looking to diversify their wealth.

After the announcement, Sony shares climbed 4.6% to 5,500 yen ($50.7; £24.4), ahead of the country's blue chip benchmark index, which ended 1.7% higher at 15,135.21.

"While the restructuring process at Sony is well advanced, the recent successful listing of Sony Financial Holding is evidence of management's ongoing strategy of focusing on capital efficiency and cash generation," Dubai International Capital said.

Sony is in the process of spinning off bits of its business that it does not consider core to its future as a consumer electronics manufacturer.

Playstation 3 woes

Sony is in the final year of a three-year turnaround plan led by its chief executive Howard Stringer.

In its last quarter, the electronics giant swung to an operating profit from an operating loss in the previous year, despite widening losses in its division which manufacturers its Playstation 3 console.

Sony slashed the price of the firm's next generation games hardware in the US to better compete with rivals Microsoft's Xbox 360 and Nintendo's Wii.

But this has meant that in some cases production costs are now higher than the machine's price tag.



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Related to this story:
Qatar 'eyes Nasdaq's LSE stake' (02 Sep 07 |  Business )
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No price cut for Euro PS3 console (13 Jul 07 |  Technology )
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Sony cuts Playstation price in US (09 Jul 07 |  Business )
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