NEW YORK (CNNMoney.com) - Movies, video games, MP3 players, and TVs. Is there anything that Sony doesn't make?

Sony may still be as ambitious as ever, but these have been fairly tough times for the Japanese consumer electronics giant.

While reporting its annual results last week, Sony said it expected its operating profits to sink to $872 million due to PlayStation 3 expenses.

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Last week Sony warned that costs related to the delayed launch of its new PlayStation 3 (PS3) gaming console later this year could take a bite out of profits in its fiscal year ending next March.

Shares of Sony (up $0.50 to $49.88, Research), which trade on the New York Stock Exchange as American Depositary Receipts, dipped after that report. But the stock is still up nearly 30 percent since the company announced that Howard Stringer was taking over as the company's chief executive officer in March 2005.

Despite the PS3 concerns, many analysts who are fans of Stringer believe that Sony is poised for some impressive growth in the years ahead.

Next week, Sony is expected to deliver additional details about the widely awaited PS3 at the Electronic Entertainment Expo, the gaming industry's most important conference.

Later this month, Sony's film division will release the movie based on the best-selling novel "The Da Vinci Code" - expected to be one of the summer's biggest box office hits. Stringer is also slashing costs - the company is cutting 10,000 jobs worldwide - and there are signs of a turnaround in the consumer electronics business.

So there are plenty of events that could be good news for the stock in the coming months. But is that already priced into Sony's shares?

Stringer, Sony's first non-Japanese CEO, officially took over in June. The British-born Stringer has been on a campaign not only to prove his worth, but to whip the company back into shape.

In September, he announced plans to close some production facilities, slash Sony's work force 7 percent worldwide and sell some of its holdings.

Analysts say he seems to be getting results, pointing to signs of recovery in the consumer electronics business, especially the PlayStation Portable gaming system, and the recent line of Bravia liquid crystal display (LCD) television sets.

And he's been able to do that without eroding worker morale or neglecting shareholders, said Evan Wilson, senior analyst at Pacific Crest Securities.

Most analysts are also impressed with how he's leading the firm toward the next frontier in consumer electronics -- high-definition (HD). From the next generation DVD, or Blu-ray technology, to HD television sets, Wilson said Stringer wants Sony to become the leader in the field. "He's setting Sony on a clear course toward leadership everything in HD," he said.

But while the company is nearly through cleaning up past mistakes and has several strong products on the market, competition is intense.

On the television front there's Sharp, Sony's still getting lapped by Apple in the MP3 market, and Microsoft has jumped out to an early lead in the race for the newest video game console with its Xbox 360.

With so many competitors for Sir Howard to slay, Sony may want to consider more partnerships like it has with Ericsson (Research) in its cell phone division or Bertelsmann in its music division, said James McGlynn, portfolio manager at the Summit Everest Fund, which owns shares of Sony.

To be sure, Sony's success is still highly dependent on its electronics business. And even though the glory days of the Walkman may be long gone, it looks like Stringer has the company positioned well for the HD era. But for many investors, both the biggest question mark and greatest potential for Sony lies with the PlayStation 3.

In March, Sony delayed the launch of PS3 from the spring until November, but the company has managed to keep gaming enthusiasts (and the media) in suspense - it's withholding key details about the system, like its price.

Rival Microsoft (up $0.37 to $23.81, Research) has viewed this as an opportunity to win over the Sony faithful, who have helped make the previous PlayStation 2 the world's biggest selling video game console.

But while some are worried about Sony's heaving spending on the PS3 and the threat from the Xbox 360, Daniel Ernst, an analyst at Hudson Square Research - Soleil Securities, said investors should remember what happened after the launch of PlayStation2.

Sony lost $452 million in the 18 months after it began selling PS2 in March 2000, according to Ernst, but just two years later sales from gaming systems had soared to $8.4 billion and the business was generating huge profits.

So if the PS3 is as impressive as everyone expects, Ernst thinks Sony will eventually see a huge benefit, regardless of the delay.

With so many moving parts and so much riding on the PlayStation 3, is it worth buying Sony?

Investors may get jittery knowing that the stock is trading at 38 times earnings estimates for this fiscal year, but most analysts say the stock still might be worth it, especially since Stringer's cost-cutting could lead to sizable earnings gains in coming years.

In addition, the stock's market value of $49.6 billion is below this year's expected sales of $69.6 billion. When a stock is trading below its projected sales for the coming year, that's typically a sign of a good bargain.

"If you are willing to look longer term, we believe the stock looks cheap," said Hudson Square's Ernst.

But it won't be smooth sailing.

Expect some volatility as the PlayStation 3 launch approaches, said William McVail, a consumer products analyst at Turner Investment Partners, a money management firm that owns Sony.

"Anyone who doesn't own (the stock) that is looking at it right now has to understand there will be some bumps in the road with PS3," he said.

Still, it's better for an investor to buy now while there's still some uncertainty about the PS3 rather than waiting for concrete evidence the console is a hit. By then, it will probably be too late to buy the stock at a decent price.

Turner Investment Partners and Summit Everest Fund both own shares of Sony. Daniel Ernst of Hudson Square Research and Evan Wilson of Pacific Crest Securities do not own shares of Sony nor do their firms have a banking relationship with the company.

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