Moody's lowers Sony rating outlook

Oct 18, 2011

Ratings agency Moody's Tuesday lowered the outlook for Sony's A3 long-term debt rating to "negative" as the global electronics giant faces weakening demand for LCD televisions.

Moody's said the downgrade from stable was because the firm "faces significant cyclical headwinds" and "structural challenges in some of its core businesses".

"Moody's believes that adverse market conditions, such as weakening demand for major consumer electronics products, especially LCD TVs, and a stronger yen, are likely to pressure the company's profitability and leverage," it said in a statement.

Sony for years has failed to make a profit on its , and slow for the core household media appliance only will add to the company's woes, Moody's said.

Rapid appreciation of the yen could also eat into earnings for Sony, which relies on foreign markets for much of its profits, it said.

Making matters worse, consumer sentiment in the major markets, especially Europe and the United States, has declined "significantly" as firms prepare for the all-important year-end shopping season, the agency said.

Major have struggled for years to see profits in their TV business amid cut-throat with foreign rivals, such as Samsung.

Moody's also said that the rapid growth of smartphones posed major medium-term threats to Sony's major audio and visual products such as televisions, cameras and games.

"Ultimately, the risk is that Sony will become a more narrowly focused company as its earnings from these segments decline and as it does not have a strong position in the smartphone business," it said.

Moody's said an upgrade for Sony was unlikely in a short run, and a return to a "stable" outlook would require the company to address the concerns.

"This will need to include restoring the profitability of its TV business and addressing the challenges which its digital AV segments and gaming face from the rise of smartphones," it said.

Explore further: IBM posts lower 1Q earnings amid hardware slump

add to favorites email to friend print save as pdf

Related Stories

Moody's downgrades LG's outlook to negative

Oct 13, 2011

Credit ratings agency Moody's on Thursday downgraded its outlook on South Korea's LG Electronics to negative, saying its position in the mobile phone business has weakened considerably.

Moody's lowers outlook on Nokia

Oct 26, 2010

Rating agency Moody's said Tuesday it had lowered its outlook on Finnish mobile phone maker Nokia to "negative" from "stable."

Sony aiming for black as annual loss shrinks

May 13, 2010

(AP) -- Sony Corp., maker of the PlayStation 3, stayed in the red last business year but predicts a return to profit as restructuring and an aggressive 3-D rollout bear fruit.

Samsung, Sony book profits but wary of road ahead

Oct 29, 2010

(AP) -- Three of the world's biggest names in electronics - Samsung, Sony and Panasonic - are bracing for weaker global demand and a rocky road even as they reported stellar quarterly profits Friday.

Sony rebounds to profit in April-June quarter

Jul 29, 2010

(AP) -- Sony bounced back to profit last quarter and raised its full-year earnings forecast, fueled by stronger demand for its PlayStation 3 gaming consoles, personal computers and televisions.

Recommended for you

IBM posts lower 1Q earnings amid hardware slump

4 hours ago

IBM's first-quarter earnings fell and revenue came in below Wall Street's expectations amid an ongoing decline in its hardware business, one that was exasperated by weaker demand in China and emerging markets.

New US-Spanish firm says targets rich mobile ad market

10 hours ago

Spanish telecoms firm Telefonica and US investment giant Blackstone launched a mobile telephone advertising venture on Wednesday, challenging internet giants such as Google and Facebook in a multi-billion-dollar ...

Technip, Heerema win third giant Angolan oil contract

13 hours ago

The ultra-deep Angolan offshore oil project called Kaombo generated the third huge contract in three days on Wednesday when French group Total picked two firms to carry out underwater engineering worth $3.5 billion.

User comments : 0

More news stories

Microsoft CEO is driving data-culture mindset

(Phys.org) —Microsoft's future strategy: is all about leveraging data, from different sources, coming together using one cohesive Microsoft architecture. Microsoft CEO Satya Nadella on Tuesday, both in ...

Simplicity is key to co-operative robots

A way of making hundreds—or even thousands—of tiny robots cluster to carry out tasks without using any memory or processing power has been developed by engineers at the University of Sheffield, UK.

IBM posts lower 1Q earnings amid hardware slump

IBM's first-quarter earnings fell and revenue came in below Wall Street's expectations amid an ongoing decline in its hardware business, one that was exasperated by weaker demand in China and emerging markets.

Down's chromosome cause genome-wide disruption

The extra copy of Chromosome 21 that causes Down's syndrome throws a spanner into the workings of all the other chromosomes as well, said a study published Wednesday that surprised its authors.