Moody's cuts Sony's credit rating to junk

Moody's cut its credit rating on Sony to junk on Monday, saying the Japanese electronics giant had more work to do in repairing its battered balance sheet.

The international ratings agency lowered its view of the company to Ba1 from Baa3, meaning its debt is now seen as below investment grade, a move that threatens to push up Sony's borrowing costs.

"While Sony has made progress in its restructuring and benefits from continued profitability in several of its business segments, it still faces challenges to improve and stabilise its overall profitability," Moody's said in a statement.

"Of primary concern are the challenges facing the company's TV and PC businesses, both of which face intense global competition, rapid changes in technology, and product obsolescence."

The downgrade was the latest to hit Japan's embattled electronics industry -- including Sony rivals Sharp and Panasonic -- which has continued to lose ground to overseas rivals even as a weak yen helped boost their profitability.

"Sony's profitability is likely to remain weak and volatile, as we expect the majority of its core consumer electronics businesses -- such as TVs, mobile, digital cameras and personal computers -- to continue to face significant downward earnings pressure," Moody's said.

It added that Sony's popular new PlayStation 4 console would help earnings at its videogames unit, but warned that profitability would likely not top levels seen in previous years.

Share your thoughts

Discussion 1 : 27/01/2014 at 05:41 PM
If Moodys want be professional, rate down the USA to junk. They only live on the costs of the whole world.
Discussion 2 : 27/01/2014 at 05:31 PM
We have been witnessing the gradual decline of this once innovative company for years now. They were too slow to change and introduce newer tech. Their PCs are good but overpriced and their TV technology is also good but no longer stands out as superior. Korean companies have taken the lead along with a handful of US firms.
Discussion 3 : 27/01/2014 at 05:22 PM
Moody's are a nobody, just ask theThai Government.

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