Bad times for Sony as some agencies feel that Sony won’t be able to recover.
Credit Agency Fitch has set Sony to Junk status along with Panasonic, which reported a $10 billion loss earlier this year. Time has not been good for Japanese companies who make most of their revenue abroad, since the high value of Yen plays havoc on their earnings.
Sony’s rating is now BBB- which is equivalent to Junk. Same goes for Panasonic. They, however, acknowledge that the high Yen has been detrimental for these companies, but the loss of leadership position in the technology area has been a major cause for concern.
“This wasn’t an easy decision. But their reputations have been hit so much that it’ll take a long while to crawl back,” said Matt Jamieson, head of corporate research in Seoul. (via FT).
“I don’t think the banks will push either of these companies to the wall,” another analyst chimed in. “But they do need to convince people that tough restructuring moves will be done in good time, while minimising unnecessary damage to healthy businesses.”
“Without a radical change to the structure of their businesses it is difficult to see profitability improving enough for them to regain investment-grade ratings,” said Steve Durose, Fitch’s head of Asia Pacific technology.
Sony is still making loss and their PlayStation division is seeing some poor revenues as well. A next-generation PlayStation console is expected next year.