Feeds

Sony on the ropes after Moody's downgrade to junk

Mini-revival isn't enough for influential credit ratings biz

5 things you didn’t know about cloud backup

Sony got off to a terrible start to the week on Monday after credit ratings company Moody’s downgraded its status to junk thanks to the continuing poor performance of its TV and PC business.

Moody’s Japan said it lowered Sony’s issuer rating and long-term senior unsecured bond rating from Baa3 to Ba1. Junk status means a bond is not a worthy investment grade. Attaining that status usually pushes up the cost of borrowing for a company, because it is seen as less likely to service its debts.

Although the Japanese electronics giant has made “progress” in restructuring under CEO Kazuo Hirai, including consolidating some of its manufacturing plants, it needs to “improve and stabilise” profitability, the influential credit rater said.

It added the following gloomy outlook:

"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.

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.

The primary reason is intense competition and the shrinkage in demand, the result in turn of cannibalisation caused by the rapid penetration of smartphones."

Moody’s said the ratings outlook for Sony is stable and the once-proud electronics player could see its ratings improve again around if it manages to turn around its PC and TV business; reverse a slide in earnings from games and digital imaging products; and reduce its debt. Simple.

One strategy that could bear fruit, although not in the short-term, is Sony’s play for the healthcare market.

Last week it announced P5 – a new joint venture in the field of genome analysis which it hopes will make it a leader in the fast growing personalised healthcare space.

In marked contrast to Sony’s plight is that of South Korean electronics player LG, which has just announced improved 2013 financials. Although it posted a net loss for Q4 2013, operating profit doubled from 117 billion won (£65m) the previous year to 238bn won (£133m), while smartphone unit sales jumped 54 per cent year-on-year to 13.2 million for the quarter. ®

Secure remote control for conventional and virtual desktops

More from The Register

next story
Ice cream headache as black hat hacks sack Dairy Queen
I scream, you scream, we all scream 'DATA BREACH'!
Goog says patch⁵⁰ your Chrome
64-bit browser loads cat vids FIFTEEN PERCENT faster!
NIST to sysadmins: clean up your SSH mess
Too many keys, too badly managed
Scratched PC-dispatch patch patched, hatched in batch rematch
Windows security update fixed after triggering blue screens (and screams) of death
Researchers camouflage haxxor traps with fake application traffic
Honeypots sweetened to resemble actual workloads, complete with 'secure' logins
Attack flogged through shiny-clicky social media buttons
66,000 users popped by malicious Flash fudging add-on
JLaw, Kate Upton exposed in celeb nude pics hack
100 women victimised as Apple iCloud accounts reportedly popped
New Snowden leak: How NSA shared 850-billion-plus metadata records
'Federated search' spaffed info all over Five Eyes chums
Three quarters of South Korea popped in online gaming raids
Records used to plunder game items, sold off to low lifes
Oz fed police in PDF redaction SNAFU
Give us your metadata, we'll publish your data
prev story

Whitepapers

Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Advanced data protection for your virtualized environments
Find a natural fit for optimizing protection for the often resource-constrained data protection process found in virtual environments.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.