Moody's cites concerns with Sony's electronics business
Sony's credit rating was downgraded to “junk” status by Moody’s Investors Service on Monday, pushing its stock lower on the Tokyo stock exchanges and in pre-market trading stateside.
The electronic giant has struggled to keep pace with changes in the mobile market, as television and personal computer sales continue to shrink.
Its difficulties generating profits from computers, cameras, televisions and other devices was cited by Moody's as part of its decision to drop the company's issuer rating and senior unsecured bond rating from Baa3 to Ba1.
“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,” Moody's said in its note.
A spokesman from Sony did not immediately respond to a request for comment.
Moody's did commend the company's restructuring efforts, writing that consolidating manufacturing plants, for instance, had reduced losses in its home entertainment, sound and mobile products businesses.
It also predicted that despite a difficult summer that saw Sony struggle with high-priced bombs such as “After Earth” and “White House Down,” Sony Pictures Entertainment will remain profitable going forward. Sony's box office woes were highlighted by activist investor Daniel Loeb in his failed effort to get the company to spin off its entertainment assets.
In response, Sony CEO has pledged to cut over $100 million in staff and overhead at the studio and overhaul the way Sony greenlights its films.
Shares of Sony were down nearly 3 percent on the Tokyo Stock Exchange and fell 2.33 percent to $16.33 in pre-market trading on the New York Stock Exchange.
Sony report its third quarter earnings on Feb. 6.