Sony Security Breach Could Cost $2 Billion

by Cynthia Wilson | May 4, 2011 9:32 am

Ask business analysts how much the Sony Corp. (NYSE: SNE[1] ) security breach[2] that compromised customers credit card and personal information could cost[3] the entertainment company and they’ll likely say upwards of $2 billion. Ask customers whose have spent time changing passwords, calling banks and the credit bureaus to safeguard their financial future how much it will cost Sony and they might say you can’t put a price tag on trust.

Not because the breach happened. Other companies and financial institutions have had their systems hacked and personal information compromised and most customers haven’t stopped doing business with them. But Sony didn’t immediately tell customers there was a problem.

It took Sony nearly a week to announce that hackers infiltrated their PlayStation Network System, and that the personal information of nearly 77 million customers could have been stolen. Now we learn that nearly 25 million accounts at Sony Online Entertainment (SOE) also were compromised.

We’re not talking just any information. Hackers hit the jackpot, gaining access to specific and comprehensive information such as names, addresses, gender, date of birth, phone number, email address, login name and passwords. Worse still, the personal information of kids and teens may be included because the breach included video game accounts.

Online shopping and living is now a way of life for many people, and some Sony customers may forgive and forget Sony’s delay in disclosing its security breach, if there is no damage to their financial records. In the meantime, entertainment competitors like Microsoft (NASDAQ: MSFT[4]), Nintendo (PINK: NTDOY[5]) and GameStop (NYSE: GME[6]) could win over a few of Sony’s customers, if they don’t back away from online gaming temporarily.

If Sony customers do defect, Sony has to bear some of the blame for not being upfront sooner.

As of this writing, Cynthia Wilson did not own a position in any of the stocks named here.

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