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Sony's Stocks Downgraded to 'Junk' By Credit Ratings Agency

Posted by Sammy Barker

Make believe?

Credit ratings agency Fitch has downgraded Sony’s stocks to ‘junk’ status, according to a report by the Financial Times. The firm dropped the conglomerate’s investment-grade score to BB-, indicating that the company is vulnerable to defaulting on debt. Fellow manufacturer Panasonic was reduced to BBB-.

“This wasn't an easy decision,” explained Matt Jamieson, head of corporate research. “But their reputations have been hit so much that it'll take a long while to crawl back.”

Sony’s financial woes can largely be attributed to its struggles in the television sector and the strong yen. Despite cutting costs significantly in its most recent financial report, the period represented the company's seventh consecutive quarterly loss.

In spite of this, the agency insisted that if the Japanese giant can resurrect its ailing segments, it will be able to avoid being downgraded again. “I don't think the banks will push either of these companies to the wall,” equity analyst Damian Thong added. “But they do need to convince people that tough restructuring moves will be done in good time, while minimising unnecessary damage to healthy businesses.”

Since taking charge of the company earlier in the year, former PlayStation boss Kaz Hirai has embarked on a massive cost-cutting endeavour, with thousands of jobs to be slashed by April 2013. The gaming business remains one of the manufacturer’s strongest assets, despite PlayStation sales being down year-over-year.

[via ft.com, eurogamer.net, polygon.com]

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User Comments (8)

NathanUC

#3

NathanUC said:

I don't think this will have much of an effect on the PlayStation brand. This is more likely to effect their home audio/visual products. It's a bummer, but not something I'm worried about.

Samholy

#4

Samholy said:

didnt like their tv anyway. Samsung look muuuuuch better :-p
their headphones suck balls (go Sennheiser !!!!!)
the only good audio memory i have of sony is my walkman sport yellow :-)

cant be the best at everything heh. as long as they keep going into the gaming zone... i want a PS4 :-( i really dont wanna go into microsoft business, and the WiiU is...well...a Wii. with a U next to it.

Flashman

#7

Flashman said:

@nathanuc1988 Why will it not have much effect on Playstation? Is it suddenly not owned by sony?

Pretty certain I read a few months ago that Sony's Playstation devision had made a loss of something like $50 million due to falling sales in both PS3 & PSP!

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