New York – Moody’s Investor Services Monday downgraded Sony Corp.’s credit rating to junk status as the Japanese entertainment technologies conglomerate continues to struggle to capture significant share of the smartphone and tablet markets.
Moody’s lowered Sony’s rating to Ba1, one level below investment grade, from Baa3. In an advisory alert, Moody’s said the outlook for the company is stable.
Sony’s credit is also rated junk at Fitch Ratings, and is on the second-lowest investment grade with Standard & Poor’s.
Sony posted a loss in the September quarter and continues to be plagued by declining demand for its TVs and personal computers.
In October Sony cut its annual sales forecast for Vaio computers to 5.8 million units from 6.2 million and said the business needed fundamental reform.
Sony in October cut its sales outlook for Bravia models by 6.7 percent and said it expected to sell 14 million liquid-crystal display sets instead of its previous projection for 15 million.
Sony’s share of global TV sales fell to 7.5 percent in the third quarter last year from 8.1 percent the previous quarter, according to NPD DisplaySearch. Sony trails Samsung and LG Electronics Inc.
Sony’s TV business has lost money for nine straight years.
Kazuo Hirai, Sony’s CEO, is trying to shake up the company with key executive changes in the electronics Sony Pictures units, while increasing the pressure on development and marketing of mobile electronics and entertainment systems.
“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.”
Sony’s Hollywood film studio began cutting jobs, including its head of technology, as the unit moves forward with $250 million in expense reductions pledged by Hirai, the company said in a statement Jan. 22.