Moody's Puts Sony (SNE) Ratings on Review for Downgrade
Tweet
Share
E-mailGet Alerts SNE Hot Sheet
Join SI Premium – FREE
Moody's Japan K.K. has placed Sony Corporation's (NYSE: SNE) Baa3 long-term senior unsecured bond and issuer ratings and the Prime-3 short-term rating of its supported subsidiary, Sony Global Treasury Services Plc., on review for downgrade.
RATINGS RATIONALE
The rating actions reflect the slow progress being made in improving overall profitability. Weak earnings across the majority of reporting units suggests the potential for a much longer period of restructuring and financial weakness than previously expected.
Moody's review will focus on the pace of recovery of business segments which have been subject to intense restructuring efforts such as Home Entertainment & Sound, and Mobile Products & Communications business which benefitted from strong smartphone growth. Both segments reported operating losses in the second quarter despite these efforts.
The review will also consider the company's overall profitability -- expected to improve from the prior year but subject to a downward earnings revision in the recent quarterly reports.
While the company's earnings for the first half exceed that of the prior year, the company reported operating losses for a majority of its operating units and deterioration in the operating profitability in business units which have historically been supportive of company's financial profile, such as Pictures and Games etc.
On 31 October, Sony reported a consolidated operating profit of JPY14.8 billion for 2Q FYE03/2014, a decline from JPY 30.3 billion reported the same period of the prior year. It reported an increase in net losses on a year over year basis.
The company's Financial Services segment continues to perform well and reported an increase in operating profit. Of the remaining seven reporting business segments, five reported operating losses for the quarter and only one, Music, reported an increase in operating profit. The continued weak financial results as a whole and the growing broad lack of positive financial results from a majority of business segments is of concern at the current rating level.
The principal methodology used in the rating was the Asian Consumer Electronics Industry Methodology published in December 2010. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
RATINGS RATIONALE
The rating actions reflect the slow progress being made in improving overall profitability. Weak earnings across the majority of reporting units suggests the potential for a much longer period of restructuring and financial weakness than previously expected.
Moody's review will focus on the pace of recovery of business segments which have been subject to intense restructuring efforts such as Home Entertainment & Sound, and Mobile Products & Communications business which benefitted from strong smartphone growth. Both segments reported operating losses in the second quarter despite these efforts.
The review will also consider the company's overall profitability -- expected to improve from the prior year but subject to a downward earnings revision in the recent quarterly reports.
While the company's earnings for the first half exceed that of the prior year, the company reported operating losses for a majority of its operating units and deterioration in the operating profitability in business units which have historically been supportive of company's financial profile, such as Pictures and Games etc.
On 31 October, Sony reported a consolidated operating profit of JPY14.8 billion for 2Q FYE03/2014, a decline from JPY 30.3 billion reported the same period of the prior year. It reported an increase in net losses on a year over year basis.
The company's Financial Services segment continues to perform well and reported an increase in operating profit. Of the remaining seven reporting business segments, five reported operating losses for the quarter and only one, Music, reported an increase in operating profit. The continued weak financial results as a whole and the growing broad lack of positive financial results from a majority of business segments is of concern at the current rating level.
The principal methodology used in the rating was the Asian Consumer Electronics Industry Methodology published in December 2010. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Micron offers Taiwan workers up to 68-month bonuses as strike threat looms
- KeyBanc Starts PPG Industries (PPG) at Overweight
- Dell shares surge on record AI server bookings
Create E-mail Alert Related Categories
Credit Ratings, Hot Corp. NewsRelated Entities
EarningsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
