Definitely disappointing news for the two Japanese consumer electronics companies, debt ratings for Sony and Panasonic fell today due to poor performance.
Covered by Reuters earlier today, the Fitch ratings agency shifted the debt rating of consumer electronics companies Panasonic and Sony down to “junk” status. This marks the first time that either company has been downgraded to this status level. Specifically, Panasonic’s rating has been shifted from a BB status to a BBB- and Sony’s rating has moved from BB- to BBB-. These new ratings indicate that Fitch believes any form of economic recovery will be extremely slow in the coming years.
When combined with Sharp Corp., the total losses for the three companies over the past year is over $20 billion. Both Sony and Panasonic are currently changing organizational structure by cutting jobs as well as selling off assets.
The decrease in the profitability of Sony and Panasonic is related to the slowing demand for new television sets, the strength of the yen and increased competition from Samsung and Apple in the consumer electronics space. With more people shifting to consuming entertainment on tablets and smartphones, it’s been difficult for Sony and Panasonic to compete in those spaces.
Over the last year, Sony’s stock has fallen by approximately forty percent and hit an all-time, 32-year low last week at 793 yen. Similarly, Panasonic’s stock hit a 34-year low on November 13 at 384 yen. It’s likely that this news could cause stock prices to fall even lower throughout the end of the year. Panasonic is in a slightly better position than Sony for economic recovery as the company isn’t as dependent on core consumer electronics like high definition televisions and home theater components.
Source : digitaltrends[dot]com
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