Decreasing Demand Leads Moody's to Downgrade Sony

Ratings agency Moody's (NYSE: MCO  ) has downgraded the debt of consumer electronics powerhouse Sony (NYSE: SNE  ) , the ratings firm announced today, pegging the ratings outlook as "negative."

Moody's said Sony's downgrade will affect about $4.2 billion in debt. The agency cited rapidly decreasing demand for products like flat-panel TVs and digital cameras. It noted sluggish economic conditions and the growing use of smartphones.

Moody's said in its press release explaining the downgrade that "without robust restructuring in the coming 12-18 months, Sony's non-financial services businesses will at best achieve roughly break-even" levels. Moody's said ratings could be further hit if "profitability, cash flow, and leverage further deteriorate." 

Ratings given by ratings agencies reflect the creditworthiness or default risk of a borrower. When a company's debt is downgraded, investors seek a higher yield on that debt because it's seen as a riskier investment.

Long-term senior unsecured bonds issued by Sony now carry a Moody's credit rating of Baa3, down from Baa2.


Read/Post Comments (2) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 09, 2012, at 9:19 PM, DoubleAughtCode wrote:

    The real problem with Sony is their belief they do not have to uphold their end of the 'Terms Of Service' they continue to write for their e-products. Take the newest exploitaiton of the PS3; which reveals the PSN passpharse among other things, and puts the user security at some risk. At this point we do not know the depth of risk as Sony/SCEA is still withholding comment on the release of the private encryption keys for the Lv0 layer of security to the public via hacking group called the Three Musketeers.

    Sony may end up an extinct organization if they proceed in such manners, but at the same time if this occurs; we can count on business' paying more attention to things that affect the consumers wallet as well as their own.

    scea, sony, sne, atvi, msft, security, breach, hack

  • Report this Comment On November 09, 2012, at 9:20 PM, DoubleAughtCode wrote:

    ...this exploit has been avbailable in method for over 80 weeks... the keys themselves have been released by hackers to anyone with a search engine for three weeks now.

Add your comment.

DocumentId: 2105077, ~/Articles/ArticleHandler.aspx, 4/16/2014 3:02:18 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement