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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17 Comments

EvilAstroboy said,
IMO , I can see MS saving SONY , like MS did with Apple

I don't think MS are interested in selling TVs...

EvilAstroboy said,

Don6t think MS were interested in selling Apples , but still helped out ?

Maybe to make the dreams of MS Office going mainstream a reality, MS has no interest in keeping the sales of PlayStations going.

EvilAstroboy said,

Don't think MS were interested in selling Apples , but still helped out ?

My understanding is there were three benefits to Microsoft for that move:
Push for Microsoft Java over Sun Java
Releasing Microsoft Office for the Macs
and keeping a competitor alive at a time when they were starting to be looked at as a monopoly.

I can't see much benefit for Microsoft helping Sony here

EvilAstroboy said,
IMO , I can see MS saving SONY , like MS did with Apple

Don't think so, MS would like either Nintendo or Sony to go down, however MS will keep one alive if it came to that, I think they would pick Nintendo, as their console is on a different level to Microsofts IMHO

yeah, because us consumers just LOVE paying the Sony "Price premium" so they can develop more DRM and rootkits and other nasty anti consumer technology.

The article almost suggests that Sony only produces game consoles and this credit rating is all about the success of those consoles.

AtriusNY said,
The article almost suggests that Sony only produces game consoles and this credit rating is all about the success of those consoles.

Their games business hasn't even reached profitability yet!

Ive always seen Sony products as overpriced, I remember shopping for TVs a few months back and Sony brand TVs were always a good £70-£200 more expensive for no obvious reason. Also had many reliability issues with their VAIO laptops.

Anyone know how much their stake in blu-ray contributes to their business?

Sony products have always been overpriced. Back in the day though, their products were 'worth' it b/c they were high quality. Now, they produce subpar products, and slap the Sony name on it, and think they still deserve the Sony 'Tax'

greensabath said,
Sony products have always been overpriced. Back in the day though, their products were 'worth' it b/c they were high quality. Now, they produce subpar products, and slap the Sony name on it, and think they still deserve the Sony 'Tax'

"and think they still deserve the Sony 'Tax'" -- LOL, tell Apple that. Sony is not at the top of the list when I look for TV/stereo stuff.

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