Moody’s Cuts Sony Credit Rating to Junk
Japan’s Sony Corporation has its credit rating cut to junk by Moody’s Investors Service as the tech giant attempts to stabilise falling sales for its consumer electronic products.
The credit ratings agency (CRA) lowered its rating to Ba1, one level below investment grade, from Baa3 and the outlook is stable, Moody’s said in an e-mailed statement. Sony already received a similar rating from Fitch in 2012, while Standard & Poor’s (S&P) has the company on the second-lowest investment grade.
“Sony’s profitability is likely to remain weak and volatile,” Moody’s said in the statement. “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.”
“There are some very good products coming out,” said Maki Hanatate, Moody’s senior credit officer, who cited positive feedback on the group’s Xperia smartphones and QX lens cameras. “But it’s uncertain how long it can maintain its competitiveness with so many other rivals rolling out various products.”
Many analysts expect Sony to lower its full-year profit guidance when it announces earnings on 6 February. Bank of America Merrill Lynch (BofA Merrill), for example, estimates Sony’s annual net profit at 17bn yen (JPY) compared with the corporation’s target of JPY30bn (US$290m).