Sony Corp's credit rating may be cut for the first time in at least 17 years by Moody's Investors Service on concern the world's second-largest consumer-electronics maker may struggle to regain its past profitability.
Moody's placed Sony's Aa3 long-term unsecured senior debt rating under review for a possible cut. The rating is the fourth highest of Moody's 10 investment-grade levels. Sony's Prime-1 rating is unaffected, Moody's said in its report.
PHOTO: AFP
Sony's shares have slumped by about a quarter since Thursday last week when the company said its fourth-quarter net loss widened to Japanese Yen 111.1 billion (US$934 million) -- almost triple the estimates of some analysts. Sony's operating loss at its electronics business more than doubled in the period after pressure to cut prices and reorganization costs squeezed earnings.
"Moody's is always a lagging indicator," said Alex Muromcew, who helps manage US$600 million in stocks globally as a fund manager for Loomis Sayles and Co in San Francisco. "After a 26 percent drop in two days, all the bad news is priced in and more."
Moody's will examine how quickly Sony's electronics business can return to profit and whether Sony's other businesses can sustain the consumer-electronics maker's earnings.
Sony's 1.52 percent bonds due in 2011 yesterday yielded 0.596 percent, or 11 basis points more than similar maturing Japanese government bonds, according to Bloomberg data. The risk premium, or extra yield over government debt investors demand to hold the bonds, has narrowed from 15 basis points since the beginning of the year. A basis point is 0.01 percentage point.
The review affects about US$10.7 billion in combined yen and dollar debt, Moody's said. Moody's, which began keeping data on Sony's rating in October, 1985, confirmed the consumer-electronic maker's current Aa3 debt rating in December, 1993 after placing it on review four months earlier.
"The rating action reflects Moody's concern that Sony may take longer than expected to regain the strong profit and cash flow generation patterns seen before," the ratings company said in a statement.
The maker of the PlayStation 2 video-game console expects net income to tumble by more than half to ?50 billion this fiscal year. That would be less than a third the ?179 billion in net profit Sony earned in the fiscal year ended March 1999, even though sales have grown by about 10 percent since then.
One of the biggest drags on Sony's performance is its electronics business, which accounted for about 66 percent of the company's overall sales in the year ended March 31.
This fiscal year, the producer of Wega televisions and Clie hand-held computers expects lower sales and lower profit from electronics, partly because of costs to revamp the money-losing business. The company also expects the stronger Japanese currency to pressure earnings.
Sony generates about 70 percent of its sales outside Japan.
Real estate agent and property developer JSL Construction & Development Co (愛山林) led the average compensation rankings among companies listed on the Taiwan Stock Exchange (TWSE) last year, while contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) finished 14th. JSL Construction paid its employees total average compensation of NT$4.78 million (US$159,701), down 13.5 percent from a year earlier, but still ahead of the most profitable listed tech giants, including TSMC, TWSE data showed. Last year, the average compensation (which includes salary, overtime, bonuses and allowances) paid by TSMC rose 21.6 percent to reach about NT$3.33 million, lifting its ranking by 10 notches
Popular vape brands such as Geek Bar might get more expensive in the US — if you can find them at all. Shipments of vapes from China to the US ground to a near halt last month from a year ago, official data showed, hit by US President Donald Trump’s tariffs and a crackdown on unauthorized e-cigarettes in the world’s biggest market for smoking alternatives. That includes Geek Bar, a brand of flavored vapes that is not authorized to sell in the US, but which had been widely available due to porous import controls. One retailer, who asked not to be named, because
SEASONAL WEAKNESS: The combined revenue of the top 10 foundries fell 5.4%, but rush orders and China’s subsidies partially offset slowing demand Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) further solidified its dominance in the global wafer foundry business in the first quarter of this year, remaining far ahead of its closest rival, Samsung Electronics Co, TrendForce Corp (集邦科技) said yesterday. TSMC posted US$25.52 billion in sales in the January-to-March period, down 5 percent from the previous quarter, but its market share rose from 67.1 percent the previous quarter to 67.6 percent, TrendForce said in a report. While smartphone-related wafer shipments declined in the first quarter due to seasonal factors, solid demand for artificial intelligence (AI) and high-performance computing (HPC) devices and urgent TV-related orders
Prices of gasoline and diesel products at domestic fuel stations are this week to rise NT$0.2 and NT$0.3 per liter respectively, after international crude oil prices increased last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices last week snapped a two-week losing streak as the geopolitical situation between Russia and Ukraine turned increasingly tense, CPC said in a statement. News that some oil production facilities in Alberta, Canada, were shut down due to wildfires and that US-Iran nuclear talks made no progress also helped push oil prices to a significant weekly gain, Formosa said
RSS