S&P places Sony debt rating on watch

Ratings agency considering downgrading PS3 maker's credit due to anticipated fourth straight year of losses.

Sony closed out its 2009 fiscal year by posting its first loss since 1995, and the electronics company's fortunes haven't improved since then. That downward trend was highlighted last week, when Sony reported a ¥18.3 billion ($234.4 million) net loss for the July-September quarter on revenues that were down 9 percent to ¥1.5 trillion ($19.2 billion).

Sony would likely like to make believe its losses were actually profits.

That news has not been taken well by credit-rating agency Standard & Poor's, the organization that instigated a tumult following its downgrading of the United States' debt in August. Reuters reports that the S&P is considering downgrading Sony's "A-" long-term credit and senior unsecured debt ratings on CreditWatch.

"The CreditWatch listing is based on our view that 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," S&P said in its report.

The ratings agency also expressed concern over Sony's buyout of Ericsson, saying that the move is likely to increase the company's financial burden. S&P expects Sony to post a net loss of ¥90 billion ($1.15 billion) for its in-progress fiscal year ending March 31, 2012--its fourth straight year of reporting losses.

S&P said that it will make its decision regarding Sony's credit rating following a meeting with the company's management. The organization did not indicate when this meeting will take place.

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114 comments
laplace985
laplace985

S&P lol. Is that the same company that had the united states credit rating at AAA even though we were trillions of dollars in debt. If only we the people had access to S&P as our sole credit rating agency; everybody in america would have good credit then.

deathblow3
deathblow3

@moviequest14 not as much as you would think major development is done. and i doubt the divisions share resources at all. i doubt Miyamoto concerned about anything but finishing zelda

hatieshorrer
hatieshorrer

I still cant get over the fanboy reaction to this article. "Sony failed to make a profit for four years and now its credit score is going down." The fanboys react how dare S&P lower Sony's credit score and how dare gamespot report it.

moviequest14
moviequest14

@deathblow3 : The wii-u development effects more than just expenses though...the more money,time,and research that is being put into wii-u the less time,money,and research is being put into 1st party titles...thus being why first party titles are so sparse right now (excluding ds titles which never sell as well).Hopefully Skyward Sword will be enough to rocket Nintendo (financially) through to the wii-u.

moviequest14
moviequest14

@Ovirew : I couldn't agree with you more...the gamecube (imo) was probably Nintendo's best console..not only with excellent first party titles..but massive 3rd party support with high-quality titles like Guns,True Crime,Billy Hatcher,Fire Emblem,and Wits End..not to mention some major Nintendo cooperations with fellow companies...the gamecube is proof that the ''hardcore'' gamers are actually the cause of Nintendo aiming at the casuals...the gamecube had hardcore titles galore,first party goodness,and new ip's including 2 of the things they gripe that Nintendo is missing today...but where were these hardcore gamers when the gamecube was a sinking ship? They were twiddling their thumbs and whistling while the gamecube was being pummeled..the system that Nintendo tried to use to reach the hardcore gamer.Imo Nintendo reached out to the casual gamers because they had to...otherwise trying to reach out to the ''hardcore gamer'' would've lead to another of Nintendo's least successful systems and would be lucky if they were still in business today.

terrascythe
terrascythe

Sony corp. and Playstation are two different divisions, the part of the company that makes TVs has nothing to do with the PS3. Sony took a huge hit when BestBuy introduced the Insignia and Dynex brands, which both specialize in lost cost TVs and electronics. I think Sony would be wise to pull their TV and Bluray products from BestBuy. There's no sense in manufacturing and shipping high quality units that are undersold by cheaply made low quality BestBuy products that are disguised under different names. I doubt the downgrade will effect Playstation very much. I'm pretty sure PS3 profits are up in 2011.

deathblow3
deathblow3

@moviequest14 sony releases new ip's the same way microsoft does. by getting developers with great games on board. name on great game made by either uncharted/naughty dog, halo/bungie, gears/epic. the last ip done for nintendo by owned subsidiary was bango kazooie/rare & killer instinct/rare&midway they had no subs this gen that i know of.

deathblow3
deathblow3

@moviequest14 here's the thing future projects are funded mostly by previous projects. so loss is solely based on current revenue streams of finished product performance. current available cash is not factored in at all when reporting gains and loss. only projected revenue and made revenue is counted. which is why these million dollar losses aren't killing sony are nintendo nobody is filing chapter 11's or anything. hurts yes deathblow not even close.

Ovirew
Ovirew

And whoever's giving me all of these negative comments, could you please at least explain why you're giving me the thumbs-down? I think I'm making some pretty valid points here.

Ovirew
Ovirew

@moviequest14 I remember the first time I saw Pikmin - it sounded odd but looked very original at the same time. An action-RTS revolving around planting, picking and commanding a squad of alien minions. All of that came from a really simple, ingenious idea Shiguru Miyamoto had - what if his backyard could be a video game? And it worked. Nintendo had a lot of really amazing, innovative game ideas with the Gamecube. It's unfortunate that people overlooked them. They refreshed most of their major IPs in some way. Mario got a water-pack. Luigi went Ghostbusters. Link went cel-shaded. Metroid went first-person. Fox McCloud jumped out of the cockpit and battled enemies on foot. Eternal Darkness was unlike anything else at the time in terms of games that break the fourth wall. Odama was pinball, voice-command and strategy all in one. Since then, there haven't been as many amazing ideas coming out of Nintendo. They stopped trying to innovate games so much, and started innovating the way we play games. And when Nintendo re-uses IPs, these days they don't change much about the game other than its graphics. Zelda still plays like OOT. Mario Kart still plays like it did on the SNES. Mario Party hasn't changed much at all. That might not be a bad thing - "If it ain't broke, don't fix it." But at the same time, I think there's a lot Nintendo (and probably a lot of other game companies, too) could do to re-envision their core game franchises.

moviequest14
moviequest14

@Ovirew : Well if Nintendo never releases new ip's then it won't take much for Sony's to be more successful :P But seriously,my mistake..I thought you meant Sony's new ip's against Nintendo's normal ones.Personally I think it is a pretty #### good business strategy for Nintendo...yes they have been silent for this generation. But when Sony releases a new i.p there is excitement...but you know how much more excitement there is when Nintendo releases a new i.p...Sony can easily abandon their ip's throughout system lives...but Nintendo can't just pop out a new i.p for the heck of it,because when they release a new ip they are going to be using it indefinitely...in Smash Bros. titles and in various sequels.Besides f-zero...name one Nintendo ip that they have completely abandoned? Sure it's been a while since Nintendo released a new ip..but you ccan be #### sure that it will be successful when it is released.

Ovirew
Ovirew

@moviequest14 I was talking about NEW, successful IPs. Nintendo hasn't made that many new IPs in the last decade that have been successful. Most of the more successful new Nintendo IPs outside of Japan in the last decade haven't actually been new IPs - it's just been Nintendo finally deciding to localize existing Japanese-exclusive game series' like Fire Emblem, Advance Wars and Animal Crossing. It's been over a decade since SSB and Mario Party came out, exactly a decade since Golden Sun, Pikmin and Paper Mario came out, and most of the other big new IPs include games like Mario & Luigi and Warioware, which are basically spin-offs of the Mario series. Brain Age was successful, but I'm not sure if Nintendo has that property anymore. Unless you want to include 'Mii' titles, most of Nintendo's other new IPs haven't been very successful over the past decade.

Nemezzis
Nemezzis

Hey Gamespot, why dont you change your name to Microspot? Or Xboxspot?

Mr_Bodywave
Mr_Bodywave

@moviequest14...What new IP has Nintendo released that did well? They had a few tied to the wii like Wii Sports and such. But nothing really new in over a decade.

Mr_Bodywave
Mr_Bodywave

Wow--CaptainHerlock to the rescue! Go go go. Spin it anyway you like, the PS3 has been a horrible dog financially for Sony. It is questionable if they are even making money on it this far into its life.

moviequest14
moviequest14

@Ovirew : I will give you that many Sony titles (ie. mainly Uncharted and Little Big Planet series) are genius and innovative in their own rights...but they aren't more successful than Nintendo's first party titles.

zinoalex
zinoalex

@yavix I believe you are correct in the way companie advertise new titles. I've seen that too but I thought they may have made two different endings and are showing the ending for the console that is strongest in that area.Thaere is a lot of marketing data out there so this could be done. You picked up on a very good point!

Ovirew
Ovirew

I hope Sony can bounce back from it. While I play 360 and 3DS, I think Sony has created more successful new, original IPs over the last decade than Nintendo and Microsoft.

method115
method115

@sulaymanqazi3 I doubt the VIta does anything good for Sony. Even people I know that are Sony fans don't want any part of it after the handheld Sony released. Add to the fact that it seems like every kid i know has a DS I doubt the Vita does well at all. Adults just aren't into handlhelds and most parents wont spend so much just for a handheld system for their child. Add to the fact that smart phones are only getting better with gaming and it's going to be a hard sell.

method115
method115

@CaptainHerlock They are giving these companies gold ratings because the companies are changing their information to benefit them. You think these companies are run by idiots? They don't just change some numbers around and hope no one figures it out. The change it in a way so that YOU or anyone they don't want to can figure it out. S&P has been under scrutiny because of the government. Ever notice that they were hardly even in the news until the downgraded the USA? Ever find it weird that they were being investigated weeks after downgrading the US? At the end of the day none of it really matters because the fact remains the Sony is losing a lot of money period. Doesn't matter if S&P downgrades them or not they'll still continue to lose money. Honestly they just need to give up on this whole 3D fad. No one wants to wear glasses to play 3D period. I know it wasn't cheap hiring Justin Timberlake to do commercial.

moviequest14
moviequest14

@ArabrockermanX : Couldn't agree more...you'd be shocked by the amount of 8 year olds I see browsing down the ps3 aisle getting GTA and Fallout.What about the ''mature'' gamers that you see hacking multiplayer for unfair advantages? A good 85% of the comments on gamespot shows the ''maturity'' of most gamers now don't they?

ArabrockermanX
ArabrockermanX

@megakick I get it you play mature games so you can feel like a big boy... Seriously whats mature about gaming? GTA is a favorite of little kids that want to play gangster, and CoD has plenty of screaming kids on the mic to remind us all that yes kids play "mature games." In gaming there has only been a handful of games that actually needed a M rating while conveying a meaningful message... Im not against blood and gore I just dont see it as mature and in some games it feels like the developers are making it part of the game for the sake of getting a mature rating...

ArabrockermanX
ArabrockermanX

@CaptainHerlock Take your own advice please and read the article again. They are talking about Sony as a whole but S&P mentioned the slow down of Sony TVs as part of the problem... If it was only about TVs they wouldn't mention the Ericsson buyout... The gaming division was losing money before and during that 4 year period of losses. What I find amazing is that these rating agencies are still relevant after what happened only a few short years ago.

moviequest14
moviequest14

[This message was deleted at the request of a moderator or administrator]

sulaymanqazi3
sulaymanqazi3

Sony said that they will lose money on every PS Vita sold, but at a attractive price for the PS Vita, there should be many people buying games that might end up profiting them.

pszone
pszone

Just face it pp dont see a great game for ps3 exclslive. they bring more games than xbox and will so face it

Lord_Regnier
Lord_Regnier

S&P need to butt out! they are just looking at stats not reality, spend money to make money!

PixelAddict
PixelAddict

Looks like Sony are not going to be able to get that Target charge card they been eyeing...

nevryn
nevryn

@CaptainHerlock You're exactly right. S&P has gone down the tubes lately. A number of their "big decisions" where they decide in a panel of pencil pushers has been entirely arbitrary. To me, they have WAY too much power. A group of nameless nobodies who are not elected or even public figures has the ability to bring a country to it's knees, just because they were criticized by that country? Its BS and any "downgrades" by them should just be ignored, regardless if they are warrented or not.

pizzamuncher
pizzamuncher

[This message was deleted at the request of a moderator or administrator]

CaptainHerlock
CaptainHerlock

Also, if anyone has bothered to actually READ this "article" (I know that's a dirty word to gamers) it doesn't say anything about the gaming division. It has to do with the television portion of their business, and the weak exchange rate against the Euro. Yet, everyone seems to be making it up as they go along, and creating their own version of this story. As far as GameSpot and their relationship with Microsoft, CNET who owns GameSpot has an advertising deal with Microsoft. I know that if the company I worked for bad mouthed one of our business partners, then I wouldn't have a job for long, would I? It's only natural that they'd tow the line. And I find the timing of this a little suspect. It just happens to come a week after Uncharted's release, and the original story from other sources is dated Nov. 4th.

CaptainHerlock
CaptainHerlock

@method115 Of course you wouldn't see the point, because as everyone knows "gamers" tend not to be able to see the bigger picture. S&P has been the subject of much scrutiny lately. So it's only natural to call their credit ratings into question, especially when they are giving gold ratings to institutions that quickly go bankrupt. Nobody from S&P ever once said "The numbers just don't add up"? I find that hard to believe. The "point" is that they' gotten it wrong for major financial institutions, and those have had an immensely negative impact on the nation's and world's economy. Why should we trust S&P now given their track record?

megakick
megakick

WOW suprising! Expensive gimicks don't sale well. GJ wasting time and money pushing 3-D tech. Yeah Wii U! I want to play all them great games like Mario, Zelda and uh Donkey Kong Country and um ahhh Cooking Mama and uhhhhh mmmm uhhhh Metroid again and again Yah Wii! Nintendo really needs to grow up and work on making more mature IP.

thenephariouson
thenephariouson

@Khoo1992, A very good point, although fierce competitors, both MS & Sony actually need each other as healthy competition is what ultimately drives these companies forward and forces them to strive for better products and services which can surely only be a good thing for us all. ......and i really believe that if either Sony or MS stopped producing gaming platforms (not that this will ever happen), that the other company will suffer as a result, as there will be nothing to force them to develop and progress the way they are. Only my 2 penneths worth guys : )

moviequest14
moviequest14

@wasakawaka : One system charging for online far from makes it the standard or special for the competition to have free wifi..this is the first time afterall,we know that 360 was the only system this gen to charge for all uses of wifi...we know that the wii-u (the only truly announced next-gen) will more than likely NOT have pay-for-play.And the psn has 77million accounts while Live has 55million.

strayfies
strayfies

@Sugrim, that's just one of several dozen mistakes people make here. It's hard to stumble through these posts without running into them. As far as I know, their movie productions and Blu-Ray patent haven't been failing, and since this is a gaming website, we could probably expect a lot of armchair specialists to complain about the PS3. I'll say this for their PS3 run so far: at least they do seem to want change. Some of their decisions have been bold, some of their take-backs have been embarrassing, and some of their ideas have been flops. But it is nice to see such a big force in the market trying new things, not just staying the course. Too bad some of this practice is likely the cause of their troubles.

CptRexKramer
CptRexKramer

Ouch. I'm telling you PSN users, you're going to be charged for the service. So when it happens, don't start whining. You've been pre-warned

Blank2k2
Blank2k2

Sony is missing a treat by refusing to charge for PSN, If it was funded properly it could be a good service and i'm sure all the additional funds could cover there data center costs for "other" devices.... While i'm sure in the grand scheme of things it wont fix there bottom line but it'll be one less hefty anchor pulling it down. Like someone said below, I also have no doubt PS4 will be unveiled with a "premium" service as a standard...much like the 360 has "Free Silver" memberships, translation: "your not getting squat unless you pay for Gold" That said, Sony have cost me £700 thanks to there terrible customer service & refusals to honor extended warranty's due to there sloppy online services / paperwork..... so if Sony ever went under, I'd be happy.

tmorri603
tmorri603

@Lhomity This is about the US not Japan. I think that you live in the US like I do and have seen the the change as well.

moviequest14
moviequest14

@deathblow3 : While I don't know the exact manufacturing cost for wii I am fairly certain it is bringing in a significant profit.Nintendo is reporting loss right now because of development...they are releasing fewer and fewer 1st party titles (the bread and butter of Nintendo after launches) and are putting a TON of money,man-power,and time into developing the 3ds,future 3ds titles,Skyward Sword,and many titles for wii-u that we haven't even heard about yet.

blaznwiipspman1
blaznwiipspman1

@FlamingFury first of all graphics don't matter on a handheld. I got one of the best gaming pc's on the planet, i don't care about graphics on a handheld or a console or anything. Im used to the best of the best of the best, no exceptions, everything set to the max, all the bling you could imagine. All I care about is portability, playability, features and games. I am interested in the psvita but I will also wait it out for the nintendo 3ds redesign before i decide which to get.

moviequest14
moviequest14

@redskinStu : What does a 15 year old home-system competition have to do with it?

redskinStu
redskinStu

Microsoft, I mean Gamespot, strikes again. Look guys, get over it. The PSone destroyed the N64. Just accept it, and move on.

K1DDO1979
K1DDO1979

i would pay for their online if they did a better job!

Cantido
Cantido

They have all that debt from putting all those Valkyria Chronicles games on PSP instead of Ps3.

sugrim
sugrim

Some ppl mistake the word Sony to mean PS3 when the playstation brand is just part of a larger group who is reporting losses.

Mr_Bodywave
Mr_Bodywave

People keep saying that the PS3 is profitable--but there really isn't much evidence of that. They just lowered their price by $50, meaning they just gave up $50 of profit on each unit. They are not likely to be making much if any money on PS3 hardware. With PS2 and PSP sales fairly low, not much profit there either. Couple all that with Vita work and pre-PS4 work and their gaming department/division/catagory is likely losing money. Not a good thing for Sony.

deathblow3
deathblow3

@Lhomity true nintendo console has sold more than everyone but i doubt the wii software sales numbers are that great. how else can yo explain 900 million dollar loss that they posted. but it not uncommon for a company to post loss on projected revenue, especially since they projected their numbers before the economy took a dump.