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).
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.