Sony Rating Downgraded to Junk Status by Fitch

Bad news for Sony investors, the company’s credit status has been downgraded to “JUNK” status by Fitch Ratings, BusinessWeek reports. The other company to have their rating lowered was Panasonic. “The future of both companies will depend on their ability to curb loss-making segments and rediscover the kind of technological leadership, which historically enabled them to develop must-have products,” Steve Durose, Fitch’s head of technology ratings for the Asia-Pacific region, said in a statement. “Sony is the higher risk of the two, hence its lower rating.”

The forecast from Fitch is that the two companies will struggle due to a strong yen and weakened economic conditions both home in Japan and overseas. Mitsuo Shimizu, a Toky-based analyst working for Iwai Cosmo Holdings Inc. has said that “The downgrades may put pressure on shares. No measures to revive these companies have been found yet.” Earlier this year Sony announced plans to cut 10,000 jobs by the end of the year. The good news is that their gaming division recently reported profitability for the last quarter as their home console, the PlayStation 3, passed 70 million units sold worldwide, putting it on almost equal ground with Microsoft’s Xbox 360. Let’s hope Sony can turn this around.

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