Sony Credit Rating Cut By Moody's
By Jeff Malester -- TWICE, 7/7/2003
Tokyo — Moody's Investors Service cut Sony's credit rating in late June, which reflects the financial company's concern that it will take Sony longer to regain its previous strong profit and cash flow.
The Moody's downgrade comes about a month following Sony's announcement that it was restructuring its business and working toward developing new consumer electronics products and technologies.
Sony stock took a dramatic drop of nearly 30 percent late in April, when the company revealed weak sales and earnings for its fiscal fourth quarter, as well as for its fiscal year.
Moody's pessimism stems from the strong CE competition narrowing Sony's profit margins and deflationary trends pressuring its profits. Moody's also feels Sony will need more time to make strong gains in the broadband network environment, where the CE maker said it has set its sights for future product development.
The credit rating agency downgraded Sony's long-term unsecured senior debt to A1, from Aa3, and warned that it might have to make further cuts. Sony's prime-1 short-term rating was not affected by the Moody's pronouncement.
Sony shares traded down following the news, off about 1.8 percent as an ADR stock, but up about 20 percent from the low of April 28, following release of its negative 12-month financials.
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