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Reuters: Sony credit downgraded to "BBB+"; Outlook Negative

O

Oblivion

Fetishing muscular manly men in skintight hosery
Man, the Tea Party just keeps fucking up everything nowadays.

-- The likelihood of a strong recovery in Sony's earnings is low, due to a massive erosion of prices, falling demand, and harsh competition in Sony's mainstay businesses.

-- Standard & Poor's lowered the long-term corporate credit and debt ratings on Sony to 'BBB+' and removed the ratings from CreditWatch. We affirmed the 'A-2' short-term corporate credit rating.

-- The outlook is negative, reflecting our view that we could lower the ratings further if we see no meaningful sign of recovery in Sony's earnings within six to 12 months.

Standard & Poor's Ratings Services today lowered its long-term corporate credit and senior unsecured debt ratings on Sony Corp. to 'BBB+' from 'A-' and removed the ratings from CreditWatch, where we placed them Nov. 4, 2011. The outlook on the long-term corporate credit rating is negative. We base the downgrade on our view that severe circumstances in Sony's mainstay electronics businesses make a strong recovery in earnings unlikely. We base the negative outlook on the long-term corporate credit rating on our expectation that we could lower the ratings further if we see no meaningful sign of a recovery in Sony's earnings within six to 12 months. We affirmed the 'A-2' short-term corporate credit rating on the company.

Sony's TV business has made repeated losses since fiscal 2004 (ended March 31, 2005). The company expects to incur a net loss of JPY220 billion in fiscal 2011. Standard & Poor's believes the major reason for the extended losses is Sony's strategy to aggressively expand its global market share despite strong competition, a massive erosion of prices, and its high cost structure compared with overseas competitors. Massive pressure on the prices of Sony's key products, such as flat-panel TVs and mobile handsets, is likely to continue, and the company's position in the global market is under strong pressure amid severe competition from Korean manufacturers and emerging Chinese companies. In our view, an enhanced focus on profits, rather than on expanding sales, and efforts to lower costs are likely to reduce losses in its TV business. However, circumstances are so severe that Standard & Poor's believes it will be difficult for Sony to return its TV business to profitability even in fiscal 2013. Therefore, we see a low likelihood of a strong recovery in Sony's earnings in the next two years or so.

Because of continuing net losses since fiscal 2008, Sony's profitability looks significantly weaker than that of its global industry peers. In addition, we believe its ratio of adjusted debt to EBITDA is likely to remain high for the next one to two years, even for companies in the 'BBB' category. Standard & Poor's also believes Sony's adjusted total debt to capital (excluding finance operations) will rise to around 40% as of March 31, 2012, from 35% a year earlier. However, we base our one-notch downgrade on our view that Sony's profitability and financial standing will gradually recover in fiscal 2012 because there will be no repeat of one-off expenses due to floods in Thailand and impairment losses on stockholdings. Also, we believe Sony's strong short-term liquidity (excluding finance operations) continues to support its financial stability.

The outlook on the long-term corporate credit rating on Sony is negative, reflecting our view that we could lower the ratings further if we see no meaningful sign of a recovery in earnings within six to 12 months. We expect strong price erosion and a fall in demand may delay a recovery in earnings in the company's TV segment and lead to further expenses in restructuring.

Sony's progress toward a recovery of earnings in its TV business in the coming six to 12 months will be key to our analysis of the company's credit quality. We may consider lowering the ratings on Sony if we see a likelihood of weak performance in the TV business leading to another net loss in fiscal 2012. Adjusted total debt to capital (excluding finance operations) of above 40% for an extended period would also pressure the ratings. To consider upgrading the company, we would need to see Sony stabilize earnings in its core businesses and show stronger prospects for financial improvement. Given the severity of the business environment, though, we consider the possibility of such an outcome low at present.
Click to expand...

http://www.reuters.com/article/2012/02/08/idUSWLA260120120208
 
S

spats

Member
697322_o.gif
 
IrishNinja

IrishNinja

Member
again: good luck, kaz.

like many, there's several moves sony's made this gen i don't care for, but we need more players on the field, not less. spin this shit and do your thing, man.

*edit: haha, Combichristoffersen fillin' in for Wario64
 
S

scytheavatar

Member
Nothing to be surprised.

Sony: 2 billion loss
Sharp: 3.8 billion loss
Panasonic: 10 billion loss

Samsung: 4.7 billion profit

How are the Japanese going to compete?
 
McHuj

McHuj

Member
scytheavatar said:
Nothing to be surprised.

Sony: 2 billion loss
Sharp: 3.8 billion loss
Panasonic: 10 billion loss

Samsung: 4.7 billion profit

How are the Japanese going to compete?
Click to expand...

They can. Like the US auto industry learned about overseas competition, I think the Japanese companies can do the same.

They could also build robots that compete for them.
 
D

DECK'ARD

The Amiga Brotherhood
Hiro_Kunimi_80 said:
well... so like last year conf?
Click to expand...

I was thinking more like Steve Job's iPad reveal, but with a tatty sofa and beer cans lying around.

Lots of slurred "Sssssony" and "PlaySssssstation", concluding with "Fuuuuck Nintendossss, fuuuuuck Microsssoftssss, fuuck EVERYTHING", as the lights dim and he passes out.

Sort of a window into private misery :(
 
G

Globox_82

Banned
who gives a shit.
This is probably for the better. Maybe finally now they will put their shit together and start being responsible. Stop making shit that eat your money, and focus on few things, and do them well.
 
B

Baron_Calamity

Member
Since the PS3 and the gaming unit in general is the only thing at Sony generating a profit, I don't think this is going to have any impact for this or next generation of consoles. Unless the Vita bombs really hard world wide. Except for the US, I don't see it doing that.
 
M

Miles X

Member
When Vita falls to low sales in the not so far away future, they're really gonna be in a catch 22 situation as to whether they should cut its price ...
 
C

Captain Tuttle

Member
Baron_Calamity said:
Since the PS3 and the gaming unit in general is the only thing at Sony generating a profit, I don't think this is going to have any impact for this or next generation of consoles. Unless the Vita bombs really hard world wide. Except for the US, I don't see it doing that.
Click to expand...

This will have an impact on the whole company. It just got more expensive for Sony to finance it's operations.

Not good.

Edit: I wonder if the stock price will lose the "Kaz bump" on this news?
 
F

faridmon

Member
I bought so many Sony products in the last couple of months and I am planning to buy a VAIO to save them, but it seems that I am not helping well enough.

Sorry Sony :(
Globox_82 said:
who gives a shit.
This is probably for the better. Maybe finally now they will put their shit together and start being responsible. Stop making shit that eat your money, and focus on few things, and do them well.
Click to expand...

This!

Sony is starting to learn, but its too late. Thier arrogance about thier product is what drove them to this position. Other companies, take Note!
 
D

DECK'ARD

The Amiga Brotherhood
The lack of marketing for Vita is suicidal, I haven't seen anything in the UK about it at all. Not a thing.

I'm not sure many people even know when it's released.
 
F

faridmon

Member
DECK'ARD said:
The lack of marketing for Vita is suicidal, I haven't seen anything in the UK about it at all. Not a thing.

I'm not sure many people even know when it's released.
Click to expand...

The way they treated europe is downright abomination. This is their biggest market and they keep mess it up. The price point is awful and the marketing, well yiou said it.
 
A

Averon

Member
DECK'ARD said:
The lack of marketing for Vita is suicidal, I haven't seen anything in the UK about it at all. Not a thing.

I'm not sure many people even know when it's released.
Click to expand...

I noted this in the Vita OT. A week away from launch (first edition bundle) and the only advertising in the US is a fucking Taco Bell promotion. No hype build up what-so-ever. It's as if SCEA wants a repeat of the PSP in the US.
 
Trojita

Trojita

Rapid Response Threadmaker
Hey Sony, how about instead of making Stringer Chairman and then in June Chairman of the Board you drop his ass?
 
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