Ratings agency Fitch has cut Sony's debt rating to "junk", claiming a loss of leadership in the technology sector presents a number of hurdles the company may fail to clear.

The news comes in the wake of Sony's attempts to reorganise its business, having taken control of Sony Ericsson at the end of 2011 in an effort to pull together its operations in the mobile space.

Along with Japanese rival Panasonic – likewise labelled junk by Fitch - Sony's TV business has also run into trouble in recent years thanks to increased competition from South Korean giants Samsung and LG.

Down and out?

"This wasn't an easy decision," Fitch's head of Asian corporate research, Matt Jamieson.

"But their [Sony and Panasonic's] reputations have been hit so much that it will take a long while to crawl back."

Fitch's rating is, of course, just an advisory, and Sony is by no means the only company operating in the mobile field to take such a hit. Back in August, Standard & Poor downgraded Finish manufacturer Nokia for a second time from BB+ to BB-.

BlackBerry manufacturer RIM has also suffered a similar fate in 2012, with Morgan Stanley having cited "rapidly deteriorating fundamentals", with commentators advising the business scale back its operations to a more manageable size.

In Sony's case, Jamieson commented that further downgrades may be avoided if the company can recover its TV business, with CEO Kaz Hirai having recently told Bloomberg it's currently being operated as an ailing operating that can be 'turned around with sufficient cash'.

Sony will also look to its struggling handheld, PS Vita, to muster strong sales over the Christmas period, with exclusive Call of Duty and Assassin's Creed releases adding to its library.

[source: Financial Times]

Post a comment - Please log in to leave a comment

PGbiz Login