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Sony CEO apologises for Internet breaches; shares fall 3%

business Updated: May 06, 2011 15:07 IST
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Sony Chief Executive Officer Howard Stringer apologised to users of its PlayStation Network, breaking his silence on one of the biggest Internet security break-ins ever, but failing to provide a date when services would resume.

Stringer's comments come after he faced criticism of his leadership since Sony revealed hackers had compromised the data of more than 100 million accounts. Kazuo Hirai, his likely successor, led a news conference and apology on Sunday.

Sony issued its first warning on the break-in a week after it detected a problem with the network on April 19, infuriating many PlayStation users around the world. Sony said it needed time to work out the extent of the damage.
"I know some believe we should have notified our customers earlier than we did. It's a fair question," Stringer said in comments posted on Sony's U.S. PlayStation blog.

"I wish we could have gotten the answers we needed sooner, but forensic analysis is a complex, time-consuming process. Hackers, after all, do their best to cover their tracks, and it took some time for our experts to find those tracks and begin to identify what personal information had - or had not - been taken."

Sony previously said it would offer some free content, including 30 days of free membership to a premium service to existing users and in some regions pay credit card-renewal fees.

"I know this has been a frustrating time for all of you," Stringer said. "To date, there is no confirmed evidence any credit card or personal information has been misused, and we continue to monitor the situation closely," he said in a statement dated May 5.
Stringer said Sony would restore network services "in the coming days", but gave no date.

"That's all well and good, but when exactly is the PSN going to be back up? "Coming Days" could be tomorrow or it could be weeks from now," a user called Morac said on the PlayStation blog.

Stringer also said the company had launched a data theft insurance policy for its PlayStation Network and Qriocity users.
By 0240 GMT, shares of Sony Corp were down 3 % in a weak market, extending its total losses to 7 % since it revealed the breach. The Nikkei is up around 3 % over the same period.

Sony's revelation of a second Internet breach on Monday came just a day after it said measures had been put in place to avert another cyberattack like that which hit its PlayStation Network, leading to the theft of information on 77 million user accounts.
The Internet breaches sparked thousands of comments on the official PlayStation fan page on Facebook, some of them from users who said they would switch to Microsoft's Xbox Live games network.

One analyst said security concerns could weigh on sales of Sony gadgets and hurt growth prospects for its network services.
"There is a real concern that trust in Sony's business will decline," Kota Ezawa, analyst at Citigroup Global Markets Japan, wrote in a note ahead of the comments from Stringer.

"The network business itself still only makes a small direct contribution to earnings, but we see a potential drop in hardware sales as a concern."

Although video game hardware and software sales have declined globally, the PlayStation Network is a key initiative for the electronics company, which one analyst estimates brings in around $500 million in annual revenue.
Sony is looking to its insurers to help pay for its data breach, an amount that one expert estimates could exceed $2 billion, but others said insurers may balk at ponying up that kind of money.

"We have a variety of types of insurance that cover damages. Certain carriers have been put on notice," said Sony spokesman Dan Race.

The hackers have not been identified, but Internet vigilante group Anonymous, which had claimed responsibility for previous attacks on Sony and other corporations, denied involvement.

The group's statement came after Sony said Anonymous was indirectly responsible for the attack on the company.
Sony, which is set to report its annual earnings on May 26, has yet to specify the financial effect of the network breach. Tokyo financial markets were closed from Tuesday to Thursday for national holidays.