Watch These Game Makers Following PS4 Release

Chris Lau, Kapitall Contributor  Sony’s ( SNE) PS4 announcement  was somewhat muted: the company did not unveil what the console looked like. Sony only showed the gamepad design. With little surprise, investors sold Sony shares after the major announcement. Sony began February with a share price of around $16, and closed recently at $14.07. [Related list:  4 Victims from Weak Nintendo Wii U Sales]

Investors should consider the PS4 release a positive move for game-makers. Total unit sales for games declined for several quarters, due to the absence of a console refresh. Strong sales in smartphones are hurting the gaming market, as consumers must budget for monthly mobile costs against console purchases.

The game-makers mentioned in the PS4 are worth a closer look are:

1. Activision Blizzard, Inc. ( ATVI): Market cap at $15.95B, most recent closing price at $14.33.

Diablo III will be made available on the PS4. Activision shares are already up significantly. The company traded recently at $14.51, up sharply from $12, thanks to strong quarterly results. Activision has a market cap of $16.15B. Activision is a beneficiary of weaker game sales, because the company is gaining market share. Its Call of Duty franchise continues to reach the top spot.

2. Sony Corporation ( SNE): Market cap at $13.95B, most recent closing price at $13.79.

Guerrilla Games, a subsidiary of Sony Computer Entertainment, showcased Killzone: Shadow Fall at the PS4 launch event. The demo showed off the graphics quality for next-generation gaming.

 

Knack was also demonstrated.

Shares moving up thanks to the PS4 announcement:

3. Take-Two Interactive Software Inc. ( TTWO): Market cap at $1.37B, most recent closing price at $14.93.

TTWO is up significantly from August 2012, when shares were below $8. The company trades at around $14.95, and will benefit as the PS4 is released. The console refresh, which will include an Xbox720, is helping shares.

4. Electronic Arts Inc. ( EA): Market cap at $5.31B, most recent closing price at $17.70.

EA is trading close to its 52-week high. Shares are up nearly 27% on the month. The game-maker, known best for its sports titles, stands to improve sales when the PS4 is released.
 

Notable companies to watch include:

5. GameStop Corp. ( GME):  Market cap at $2.98B, most recent closing price at $24.61.

Investors may breathe a sigh of relief. Sony said that it will not block used games, though the PS4 will support on-demand purchases. Still, the used game functionality is clouded, as described here. Limiting the used game segment will hurt GameStop but will also likely hurt Sony’s PS4 sales.

6. Advanced Micro Devices, Inc. ( AMD): Market cap at $1.8B, most recent closing price at $2.53.

The chipmaker will be supplying the graphics and core processor for the PS4. The graphics chip, or GPU, will be 18 “compute units” and can run 1.84 TFLOPS. The CPU is an 8-core 64-bit processor, named “Jaguar.”
 

 

( List compiled by Chris LauDisclosure: Author has a long position in EA.)

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