Moody's eyes up Sony's debt: Hmm... junk? Bam! Shares drop 11%
Drastic cut in full-year profit forecast prompts ratings agency review
Sony shares plunged 11 per cent in Tokyo overnight while ratings agency Moody's has placed the Japanese firm's debt on review for a downgrade that could take it to junk status.
Sony said yesterday it was cutting its full-year profit forecast by 40 per cent after another disappointing quarter in tellies and game consoles.
The Japanese firm has had some of its earnings propped up by revenue from its movie and music business, but its film unit posted an operating loss of $181m. The company blamed expensive action movie White House Down, which flopped over the summer, for the losses.
The flop helped net loss at the whole firm to hit ¥19.3bn ($195m), down 25 per cent from the same quarter last year. Sony said that it now expected net profits for the full year to the end of March 2014 to be just ¥30bn ($303.6m).
The news sent stocks down 11.13 per cent in Tokyo to ¥1,668.
Meanwhile, ratings agency Moody's has said that it is putting Sony's Baa3 long-term unsecured bond and issuer ratings on review for downgrade. A Baa3 rating means that if the debts are downgraded, they will reach junk status. ®