Sony's credit rating downgraded to speculative

No one is safe from the pinch at the moment. Sony is the latest tech giant to be hit by general populous tightening their belts, having their credit rating downgraded from BB- to BBB-.

If this is alien to you, Fitch Ratings are applied to both companies and countries, using grades from AAA to D (with +/- intermediates for each grade). While BBB- isn’t the end of the world, their grading is now classed as speculative with the outlook negative. Panasonic also had their rating dropped to the BBB- grade.

Sony has been bleeding money for the past four years. The PS3 initially launched in 2006 to a lukewarm response, mainly due to its high price at the time. It took Sony until 2010 before they started to make money on the console.

In-between then and now, Sony has unsuccessfully attempted to crack the portable gaming market with the PSP Go and PSP Vita. With both devices overpriced and spec’d incorrectly for the market, they failed to sell as many units as Nintendo’s DS handheld device. The consumer was not convinced.

Fitch’s Steve Durose said in a statement:

We think there is little headroom for Sony. Without a radical change to the structure of their businesses it is difficult to see profitability improving enough for [Sony and Panasonic] to regain investment-grade ratings.

Sony has always been known as a company that provides products at premium pricing. While Sony isn’t dead in the water yet, the company will need to make serious changes to its business practises if it wants to become profitable once again.

Source: Computer World UK | Image courtesy of Technizia

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