“The Outlook is Negative”: Standard & Poor Downgrades Sony’s Financial Rating, Warns of Further Action
With Sony losing money for four straight years in a row – over $2 billion in the last quarter alone – credit rating agency Standard and Poor has downgraded the company, citing “a massive erosion of prices, falling demand, and harsh competition” across Sony’s main businesses.
Standard & Poor’s Ratings Services today lowered its long-term corporate credit and senior unsecured debt ratings on Sony from A- to BBB+. BBB+ means that the agency – which is highly respected by investors – has downgraded its view of the company and its recommendation on whether people should invest in Sony, something which is sure to affect the Sony’s share price adversely.
S&P commented that the “outlook on the long-term corporate credit rating is negative”, saying that the “severe circumstances in Sony’s mainstay electronics businesses make a strong recovery in earnings unlikely”. The group warned that they could lower the rating further should they see no meaningful sign of a recovery within 6-12 months.
One of the main reasons for Sony’s failure is given to be their TV business, which has made repeated losses since fiscal 2004 totaling in the tens of billions. S&P stated that even if Sony shifted its focus from market share to profitability, they would still probably not make money in the industry until fiscal 2013.
Sony’s profitability is noted as being “significantly weaker than that of its global industry peers”, but did note that their will (probably) be no repeat of one-off expenses due to floods in Thailand and impairment losses on stockholdings, which should help the company.
To even think about upgrading the company, S&P would have to see Sony stabilize their core business earnings and show stronger prospects for financial improvement – something they see as unlikely to happen.
The news is set to make Kaz Hirai’s job as the upcoming CEO and President of Sony even harder, as he struggles to return profitability to what was once the king of the tech industry.
6 Responses to ““The Outlook is Negative”: Standard & Poor Downgrades Sony’s Financial Rating, Warns of Further Action”
It’s a shame they are so unprofitable considering the technology leaps over the past few years and the quality products put out outpace even what NASA is doing these days. On a brighter note it’s good to know the consumer isn’t getting ripped off.
If you buy their over priced crappy Tvs you’re getting ripped
Actually their TV’s are pretty fracking awesome. I got a 55″ Bravia LED 3D Tv for less then $1800.
Suck on that.
I’m sure Sony can do better as a company but it’s ultimately up to Sony whether or not they think they need to do something different or not.
Shocking news – not. I’m surprised this didn’t happen sooner. You can’t loose a billion dollars, yet alone 2.03 billion and not expect the S&P to downgrade you. I really hope they can turn it around, but unless I see some major changes I don’t expect this to happen.
+ Maybe all those ***** on the internet who slag off the PS3 & SONY over the years have helped SONY lose money to? :-/ SONY need to be faster defending themselves on the internet when lies about them come out. Over the years SONY haven’t said nothing when internet sites bad-mouth the PS3? F-IN sue the lot of them :-/ Stick up for yourself SONY because i can’t do it for you all on my own LoL:D Anyway if anyone can get SONY into the black again GOD Kaz can;)