Notable credit rating agency Fitch Ratings has downgraded Sony to "junk", following various hits to the company's reputation including its seventh consecutive quarterly net loss earlier this month.
Sony posted losses earlier this month, in part due to its declining video game business. Now Fitch has dropped Sony down three notches to BB-, meaning that it no longer classes Sony as an investment-grade company.
"This wasn’t an easy decision," Matt Jamieson, Seoul-based head of corporate research, told the Financial Times (registration required). "But [Sony and Panasonic's] reputations have been hit so much that it'll take a long while to crawl back."
Jamieson notes that a huge part of Sony's problem is its failing TV business, and if the company was to axe the sector, further downgrades may not be necessary in the future.
Damian Thong at Macquarie Securities added, "They do need to convince people that tough restructuring moves will be done in good time, while minimising unnecessary damage to healthy businesses."
Fitch is the first major ratings agency to downgrade Sony this low, although earlier this month the Moody's agency lowered Sony to just one notch above junk.
Just more evidence that these ratings agencies are clueless. Or rather, proof that slavish application of a financial model is no substitute for actual thought.
I don't think they're clueless, sony is in real financial trouble (which I don't think they're ever going to get out of). I'm not sure what makes you question this agency's move?
This rating is supposed to indicate the probability that Sony will default on its debt obligations. However Sony has a very friendly creditor in the form of the government of Japan. You can see this in the recent purchase of Sony's chemical business by the Japan Development Bank, a state owned entity. It might not be palatable to see so much public money flowing into an enterprise, but it's there and they won't default until Japan turns off the cash faucet.
Doesn't sound like the Japanese govt is really going to back Sony, so they appear to be on their own.
“In this society of capitalism, I believe companies in general should rebuild themselves through their own efforts,” the outspoken Maehara.
http://www.japantoday.com/category/business/view/govt-wont-bail-ou t-struggling-e lectronics-companies-maehara
They just seem unwilling to make real changes to get out of the doldrums they're in. Instead they just shuffle the decks. This isn't just Sony - a lot of other too-large and ponderous Japanese firms are in this situation. Heck, so is the Japanese government. Nintendo doesn't mind shaking things up though.
I was told by a teacher long ago. The stock market is, always will be broken. Until something better gets invented we're stuck with it, and all the useless things included.
It may be broken, but a key thing to realize here is this is not about the stock price. This is a bond question, and while of course there is a relation between the 2, it's perhaps less strong than might be imagined.
" I was told by a teacher long ago. The stock market is, always will be broken. Until something better gets invented we're stuck with it, and all the useless things included. "
" I'm sorry but your teacher was a Marxist. :-( "
Definitely not, because a Marxist isn't waiting for something better to get involved, a Marxist believes, that the collectivization of capital goods can solve problems like the broken stock market system.
(Which is fundamentally broken, because it lives on the idea, that the needs of the company - with all it's employees - and the needs of the share holders can be the same, while these needs contradict in most cases)
My teacher said we're stuck with it. He didn't say it should go away. So here's a thought, come up with something better? No? Asking for too much I suppose. I don't see how an ancient form of government is the solution, but that's where you're head's at.
It's easy to question, difficult to answer and costly to ignore reality.
“In this society of capitalism, I believe companies in general should rebuild themselves through their own efforts,” the outspoken Maehara.
http://www.japantoday.com/category/business/view/govt-wont-bail-ou t-struggling-e
lectronics-companies-maehara
" I'm sorry but your teacher was a Marxist. :-( "
Definitely not, because a Marxist isn't waiting for something better to get involved, a Marxist believes, that the collectivization of capital goods can solve problems like the broken stock market system.
(Which is fundamentally broken, because it lives on the idea, that the needs of the company - with all it's employees - and the needs of the share holders can be the same, while these needs contradict in most cases)
It's easy to question, difficult to answer and costly to ignore reality.