Strong Playstation 4 sales not enough to keep Sony from "Junk" status

Sony Playstation PS4
Credit: Sony

You might think that Sony is out of the financial woods now that the Playstation 4 is out and selling well. (As of December 28th Sony had sold 4.2 million Playstation 4s.) Sadly, not true.

Moody’s Investors Service has downgraded Sony's credit rating to "Junk" status (technically Ba1 which is one level below investment grade), according to a post at Bloomberg. Fitch Ratings also classifies Sony as "Junk" while Standard & Poor's has it on the second to lowest investment grade.

The problem isn't the PS4 of course; it's almost everything else. "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," Moody's said in its statement.

Having junk status means it's going to cost Sony more to borrow money, which of course just adds to the company's troubles.

Sony was founded in 1958. To me it's one of those brands that has always been there. But then I felt the same way about Kodak and look what happened to them! Could the company fail? It's far too early to be thinking seriously in those terms, but I'm pondering a video game world where Microsoft doesn't have Sony around to keep them honest!

Sony reports it's quarterly earnings on February 6th. Maybe they'll surprise the investors, but things are looking grim.

Read more of Peter Smith's TechnoFile blog and follow the latest IT news at ITworld. Follow Peter on Twitter at @pasmith. For the latest IT news, analysis and how-tos, follow ITworld on Twitter and Facebook.

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