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Despite strong PlayStation 4 launch, Sony’s credit rating drops to ‘junk’ status

Above: When Sony engineers brought out the new 55-inch OLED TV, it crash and displayed a blue screen. Sony CEO Kaz Hirai said, "Excellent," in his best sarcastic voice.

Image Credit: Dean Takahashi/VentureBeat

Sony had a successful PlayStation 4 launch during the holiday season, but Moody’s Investors Service has still cut the Japanese company’s credit rating to “junk” status.

Japan’s largest electronics maker is still struggling to win in the smartphone and tablet markets, even as demand is shrinking for TVs and personal computers. That’s a bad sign for the venerable Japanese brand created by pioneers Akio Morita and Masaru Ibuka in 1958.

Moody’s cut the credit rating to Ba1, a level below investment grade. That means it will become more expensive for Sony to borrow money.

It’s not clear how much the strong launch of the PS4 will help. Sony said it sold more than 4 million consoles during the holidays.

Sony had a surprise loss in the quarter that ended Sept. 30, creating a big bump for chief exec Kaz Hirai on his quest to turn around the earnings at the company.

“Sony’s profitability is likely to remain weak and volatile,” Moody’s said in the statement. “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.”

The PC industry declined 10 percent in 2013, and Sony cut its forecast for Vaio computers in October. It also cut its forecast for TVs. Shares of Sony feel 3 percent. Sony is expected to report third fiscal quarter earnings (ended Dec. 31) on Feb. 6.

Besides the PS4, Sony is also focused on making UltraHD TVs and Xperia smartphones.

More information:

Sony is a Japanese multinational conglomerate corporation headquartered in Kōnan, Minato, Tokyo, Japan. Sony Corporation is the electronics business unit and the parent company of the Sony Group, which is engaged in business through... read more »

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