Sony Credit Rating Downgraded

SonyGamesindustry reports that rating agency Standard and Poor’s has downgraded Sony’s credit rating to A- for long term loans and A-2 for short term loans due to “the likelihood of Sony’s weak earnings persisting has increased as there are no signs of a halt to the deterioration in the earnings of the company’s core flat panel TV business,” as stated by S&P.

Other considerations include Sony’s takeover of the Sony Ericsson joint venture.

Sony posted a net loss of ¥27.0 billion ($350 million) for this quarter with the Consumer Products division contributing a ¥34.6 billion loss ($449 million).

Analysis: We expected this kind of news when Sony announced their second quarter results, but we got a bit more information this time around with more of an emphasis on the acquisition of Sony Ericcson and the flat screen TV problems.

The S&P rating does not mention the PlayStation brand and continues to focus on the struggling LCD TV business. This would seem to imply that there is no problem with the video gaming side of the business, but there is no way to be 100% sure that the Sony PS3 price cut did any harm unless Sony splits off the PlayStation division off from the rest of Consumer Electronics.

Mohamed Al Saadoon

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