Moody's cuts Sony's credit rating to junk

Moody's cuts Sony's credit rating to junk

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

TOPICS: Tech Industry, Japan

The international ratings agency, Moody's, has lowered its view of electronics giant Sony 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 is 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 video games unit, but warned that profitability would likely not top levels seen in previous years.

Topics: Tech Industry, Japan

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.


Log in or register to join the discussion
  • Wow!

    Good thing I hedge my bets and bought both Consoles! Now if Sony can't make the inventory to attract developers at least I'll have the Xbox!

    This company is a mess, they always bet the farm on products and that's incredibly insane to do generation after generation!
  • Great Laptops

    As you look at the laptop market Sony is a leader in many ways. As I look around school in my graduate department I suspect that either Apple or Sony are the leader. No other brand is close. In the hybrid market there is no question Sony is leader. To bad this status changes every few months.
  • Sad to see

    I used to be a great fan of Sony.

    In television and video equipment, they were once so far ahead of the competition they were unrivalled. That was in the good old days.

    Now Sony has been brought to its knees.