Sony’s Credit Rating Downgraded To Junk Status

The PlayStation 4 is a great product for Sony, sales are incredibly promising and it is providing a lifeline that the company really needed as we entered 2014, however that hasn’t stopped Sony’s credit rating being cut down to “Junk” status by Moody’s Investor Service.

Sony Entertainment is doing rather well, and it is keeping the company profitable at this time, but they should be doing so much better. The TV and PC market are fiercely competitive and it is proving too much for Sony, with rivals like Samsung and the mobile and tablet markets being full of many options that are currently more popular than what Sony have to offer.

“While Sony has made progress in its restructuring and benefits from continued profitability in several of its business segments, it still faces challenges to improve and stabilize its overall profitability and, in the near term, to achieve a profile that Moody’s views as consistent with an investment grade rating,” Moody’s said in a statement.

“Sony’s profitability is likely to remain weak and volatile, as we expect the majority of its core consumer electronics businesses – such as TVs, mobile, digital cameras and personal computers – to continue to face significant downward earnings pressure.”

Sony really need to tighten up their business and stem losses in the TV sector, but for now their PlayStation consoles, as well as their upcoming PlayStation Now cloud-gaming service are their front runners. Sony make some simply mind blowing TV’s and some very competitive smartphones, but if enough people aren’t parting with their money for the products at retail, then something has to change, and it has to change fast.

Will this be the push Sony need to split up their business and let their entertainment and electronic divisions go their own way? Or will their promise to cut $250 million in expenses from the entertainment business actually be enough to turn them back to being profitable? Only time will tell.

Thank you Forbes for providing us with this information.