Investor Service Rates Sony's Credit Rating as 'Junk'

January 27, 2014 - Andrew Eisen

With the internet focusing so heavily on Nintendo's financials, you might think that everything is rosy with its competitors but, as it turns out, Sony also has a weed or two.

Moody's Investors Service has lowered Sony's credit rating from Baa3 to Ba1, which is a level below investment grade.

But isn't Sony's new Playstation 4 selling really well?

Yes, but you have to remember that video games are not Sony's only business and when you look at the entire picture, Sony has had to lower its net profit forecast by 40% and is looking to make $250 million in cuts in its entertainment businesses.  (Heck, even Microsoft reportedly loses $2 billion a year on Xbox.  No one's got it easy.)

"While Sony has made progress in its restructuring and benefits from continued profitability in several of its business segments," said Moody in a statement, "it still faces challenges to improve and stabilize its overall profitability and, in the near term, to achieve a profile that Moody's views as consistent with an investment grade rating."

"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."

Still, Moody's outlook for the company is described as "stable."

Source: GamesIndustry.biz

-Reporting from San Diego, GamePolitics Contributing Editor Andrew Eisen

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Comments

Re: Investor Service Rates Sony's Credit Rating as 'Junk'

Don't forget they have high quality and extremely expensive TVs and PCs! I wonder though will they make a Sony Steam Machine? lol

Re: Investor Service Rates Sony's Credit Rating as 'Junk'

Those mediocre-quality yet still-expensive TV's sell at a loss.

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