Moody's reviews Sony ratings for downgrade
Moody's Investors Service is reviewing Sony Corp.'s credit ratings for a possible downgrade because of worries about weak consumer spending, and Sony's ability to adapt to rapid developments in consumer electronics.
The Japanese consumer electronics manufacturer reported Thursday that its loss in the quarter through June worsened to 24.6 billion yen ($316 million) from 15.5 billion yen a year earlier. The weak quarter prompted Sony to lower its earnings outlook for its fiscal year through next March.
Moody's cited difficulties for Sony, particularly in TVs and mobile devices. Sony has lost money on its TV business for eight years, faced with stiff competition from South Korea's Samsung and LG amid falling prices for electronics. Samsung and Apple Inc. have dominated the market for smartphones and tablets.
The ratings agency said weak consumer sentiment in Europe and China and the strength of the yen versus the euro would hurt Sony's export-heavy business. A strong yen means that sales in euros result in fewer yen than before. That cuts into profits and can force exporters to raise prices overseas to make up the difference, reducing the products' competitiveness.
About $4.7 billion in debt is affected by Moody's review, including Sony Corp.'s long-term senior unsecured bond and issuer ratings of Baa1, three notches above junk status.
A downgrade could increase Sony's borrowing costs going forward.
Sony shares fell 7 cents to $11.57 in afternoon trading.