Moody's downgrades Sony
Global rating agency Moody's has downgraded the issuer and long-term senior unsecured bond ratings of Sony Corporation to Baa3 from Baa2. At the same time, Moody's has downgraded the short-term ratings of Sony and its supported subsidiary, Sony Global Treasury Services Plc., to Prime-3 from Prime-2. The ratings outlook is negative. The rating actions reflect Moody's concern that an increasingly rapid deterioration in demand in the digital AV market due to sluggish economic conditions and fast structural changes will weigh more heavily on Sony's earning than previously expected. The structural changes include the maturation of major digital AV products, such as flat panel display (FPD) TVs, the growing use of smartphones, and the cannibalization of demand for low-end portable digital products, including compact digital cameras. Operating losses in its TV business -which accounted for 11% of non-financial services revenue in 1H2012 -- are likely to continue pressuring overall earnings. The company expects an operating loss of JPY80 billion in FYE03/2013 and then breakeven in FYE03/2014.