Fitch Downgrades Sony to Speculative Grade.
Fitch downgraded Sony “given the company’s loss of technology leadership in key products, high competition, weak economic conditions in developed markets and the strong yen“.
The problem is certainly not the camera business: “Fitch believes that continuing weakness in the home entertainment & sound and mobile products & communications segments will offset the relatively stable music and pictures segments and improvement in the devices segment which makes semiconductors and components.“.
As you know Sony is completely restructuring the company and Fitch writes: “Fitch believes that the strategic initiatives announced in April 2012 to turn around the company’s electronics business are the right approach, but execution is a risk and macro headwinds and intense competition across almost all of Sony’s key products may delay the recovery.”
That will probably bring to a long discussion now if such rating agencies are trustworthy or if Sony is trustworthy. We have to see it globally. It’s a hard time for many companies and many countries. And I am not sure how to decipher what is happening now. In short, I am not worried about Sony, I am more worried about us learning how to come out of a global crisis liek that!
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derrick
6 months ago |thx for clearing that out
as a sony dslr user i hope all the best for them!
guessjustme
6 months ago |http://www.ft.com/cms/s/0/b7745c74-2a5e-11e2-99bb-00144feabdc0.html#ixzz2CzdGAhmy
Moody’s cuts Sony to one notch above junk
By Jonathan Soble in Tokyo
Moody’s has cut its rating on Sony’s debt to the lowest level above junk and warned of possible further downgrades, as it cast doubt on the Japanese group’s ability to rebuild its struggling consumer electronics franchise.
The credit agency reduced Sony’s long-term debt rating to Baa3 from Baa2, its third downgrade of the company this year.
NEXfive
6 months ago |Nevertheless rating isn’t serious business at all if you only think about Lehman’s ratings until bankruptcy, these ratings are serious issues for Sony to loan money on the market. Risk is this so called analysis will be repeated by money gamblers as gossip again and again. I remember a time when this mob said Apple would have to give up their own OS and migrate to Windows to survive. Better get out and take pictures…
Rob
6 months ago |Does anyone else feel they have to start taking a leadership role in their various product segments – and that in imaging, it might not be good enough to get most of their revenue from being a sensor supplier? We’ll see if they have the fear of god in them come January, based on the quality of new offerings.
NEXfive
6 months ago |Sony does have leadership when it comes to entertainment. Having bought Olympus Sony’s good in business with medical stuff. Well, they’ll never become a leading lens builder, of course, but beside sensor leadership Sony’s dominating the video and mirrorless market. They might give up stuff like television as a reply to gamblers’ gossip like that, but on the other hand they’ve shown a 4K-Flat-TV recently.
So keep in mind whether you want to find arguments for upgrading or downgrading: It’s coffee cup reading anyway…
calxn
6 months ago |Sony didn’t buy Olympus. They bought new shares in Olympus… so they can’t take any credit for Olympus medical sales.
Alien
6 months ago |No GFC here in Australia…..
Rick
6 months ago |Sorry for those proclaiming Sony is dead, but its not going anywhere. Sony still generates huge amounts of money, they’re just swimming in debt and getting dragged down by some divisions bleeding red-ink. Bankruptcy might be in the near future so it can shed some of its unprofitable divisions and reorganize its debt, but Sony as a company will still be around for awhile.
Bollox
6 months ago |And yet Sony is very serious about becoming number one… I am sure it’s not dead but it’s far from number one and it will stay far as long as they don’t understand one or two things about photography. I love my Sony projector but the cameras… Toys for boys with many menus and little usage.
Frank
6 months ago |Aww, you are obviously scared of all those complicated buttons and menus. Stick to your iPhone.
Ricardo
6 months ago |Sony needs to dump unprofitable TV’s and get out of cell phones. Both markets are flooded with Korean made junk. (mainly referring to LG.. samsung is ok.. but barely)
Milt
6 months ago |Their core business model is broken and the Koreans are putting it to them in just about every segment but imaging. They better look at how Samsung does business and try to turn things around.
calxn
6 months ago |Sony just needs to get focused. Too many products, too many models. Japan is no longer a low cost production country. They have lost the cost advantage to South Korea and China.
They also need to stop trying to gain marketshare by selling at a loss. The PS3 is a perfect example of that. At one time, US corporation also believed in lifetime employment and kept money losing businesses going until it caught up with them. Today, even US employees no longer expect continuing employment in money losing business. This is a cultural change, and it will also occur in Japan. Sony will survive, but they haven’t made the change yet. It will be many more tough years before they will make the change. It will get worst before it gets better.
Mike
6 months ago |It’s difficult to get focused if your AF system is inferior to the competition
Frank
6 months ago |Yeah because the D7000 focusses really well, oh wait…
mando
6 months ago |As an learning investor, they are looking at just numbers and the stock price, not from our perspective. Sony has been really outstanding in their products! I agree they could consolidate their lineup and maybe start working with 3rd party lenses so instead of having a limited amount of a99 lens that work with all the focus points, they could have included more lenses that way if they went that route instead.
whistler
6 months ago |Sony has a fundamental problem in producing devices which as such are perfect from a technology standpoint, but are crippled intentionally in order to protect other parts of their business.
Take the A99 for example. They could have given it a few more video modes, with high frame rates (e.g. 120 fps) but they did not. They could open the firmware and make it public, which would immediately allow users to build their own custom enhancements. No, because they want to protect their high end camera business. They keep bringing out new cameras while the things which we need most are new lenses. And if they produce a new lens, they price it at twice the price of the Canikon equivalent. And this is the situation in the camera segment which is supposed to be the strong part of Sony. Go figure how bad it looks in those which are supposed to be its weak segments like TV or mobiles.
Now, does the current situation change something for us A-mount and E-mount users? To a certain extent. If Sony fails to assure people that its existence is guaranteed, people will adopt a wait and see tactics. You would not want to enter a system which is in risk of beeing discontinued. Remember what happened when Minolta quit the photo business? Same could happen now and could mean a major devaluation of your lenses and cameras.
So Sony should definetly wake up and start bringing products to market for which we are all waiting.
Frank
6 months ago |I will say it again. It has been said for SIX YEARS that Sony will pull out of Alpha. It has been repeated over and over since the A100.
whistler
6 months ago |Well, I have not said they will pull out. There is though a distinct chance that if Sony does not change something rather quickly, they will go belly up. And in a case where Sony would go bankrupt, it would put the A-mount into quite some danger.
Overall, this is definetly not good news in a situation where Sony is desperately in need of gaining market share
Abo
6 months ago |Funny…. Those are the same agencies that graded the dodgy tradings AAA that made the world colapse…
johns_dog
6 months ago |Sony has made some fantastic leaps forward in camera technology over the past few years and this has been a great addition to the playing field. The superb sensor used in the OM-D helped Olympus to really give the MFT ecosystem a nudge forward whilst the full frame sensor used by Sony, Nikon et al has really upped the ante for the Super Pro market.
The problem is that Sony is a huge company, in other parts of Sony are groups that seem to almost hate customers. Scandal after scandal have occurred wherein rootkits were installed on users machines, products modified to reduce functionality after purchase and users data not afforded adequate security protection measures. This has put a huge dent into Sony’s brand.
As an individual I am happy to have a Sony sensor in my Camera but I would not like to have the whole product made by them. They have proven time and time again that the customer is the least important aspect of their business.
In the end a company like Sony that sells consumer products cant keep on screwing its users. There is a lesson in this for Apple, they will be in the same position 10 years from now as once peoples opinions turn they almost never turn back in your favour.
References:
http://www.wired.com/gamelife/2011/04/playstation-network-hacked/
http://en.wikipedia.org/wiki/Sony_BMG_copy_protection_rootkit_scandal
Sahaja
6 months ago |Sony at greater risk than Panasonic in electronics downturn:
http://www.reuters.com/article/2012/11/23/us-sony-panasonic-fitch-idUSBRE8AM02T20121123
and, at the same time – Samsung Electronics hits new high:
http://www.reuters.com/article/2012/11/23/markets-korea-stocks-idUSL4N09315920121123?type=companyNews
Des Maio
6 months ago |Credit agency ratings predict the odds that a company will go bankrupt. A Baa3 rating is the weakest of the “good” ratings. A downgrade to Ba1 can mean that pension funds can no longer hold bonds issued by a company, so only speculative investors will take the risk. That makes it more expensive to borrow or refinance debts.
Sony has been losing money on most of its manufacturing operations. It probably cannot cut costs fast enough to offset falling prices, and the high value of the yen inflates costs of operations in Japan and the yen cost of financing operations elsewhere.
Cameras can’t save the company. P&S prices and volumes are falling. Not many can afford or need an RX1 or an a99. 3d displays flopped. 4k displays are an expensive gamble. PlayStation sales have peaked. Apple and Samsung dominate tablets and phones.
Why assume Sony’s future will be any different than that of Kodak, Chrysler, or Hostess “Twinkie” Bakers? Managment simply hasn’t the fortitude to exit what makes no money.