Sony’s Stock Reduced to ‘junk’ Status Once Again, Despite the PS4 Success
Sony is definitely doing well when it comes to PS3 and PS4 sales. However, it seems that is not enough to save the company’s stock status. It has been revealed that Sony’s stock has returned to ‘junk’ status. This comes from Moody’s Investor Service. More details below.
GI.Biz is reported that Moody’s Investors Service has slashed Sony’s stock rating from Baa3 to Ba1. That makes Sony’s stock one level below investment grade, this means potential investors are being advised to steer clear of investing in Sony’s business.
However, Sony is still “stable” according to the same report.
VG247 Highlighted some important information from the report:
“While Sony has made progress in its restructuring and benefits from continued profitability in several of its business segments, it still faces challenges to improve and stabilize its overall profitability and, in the near term, to achieve a profile that Moody’s views as consistent with an investment grade rating.
“Of primary concern are the challenges facing the company’s TV and PC businesses, both of which face intense global competition, rapid changes in technology, and product obsolescence. Sony’s profitability is likely to remain weak and volatile, as 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.”
When it comes to the gaming side of the equation. Moody did say there could be a profit increase, due to the PS4 and PS3, but “not to the extent seen with the profitability level in 2010.”
Sony does have some big movies and technology coming in 2014, so that should their other areas get back to normal status. What do you guys think?
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61 Responses to Sony’s Stock Reduced to ‘junk’ Status Once Again, Despite the PS4 Success
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Oh man. I know every major gaming website is gonna have this plastered on their front page.
LOL. Gaming websites are always impartial and will give negative Sony & Microsoft news equal coverage to negative Nintendo news. (sarcasm)
Sucks for Sony.
Despite my issues with the PS4, I still hope the company turns things around. It would be a bad thing for the House of Playstation to go bust. If it ever does, it would be Nintendo struggling against the unlimited cash-reserves of Microsoft. The industry needs Sony to prevent any other company from monopolising videogames - and yes, that includes Nintendo.
I do not believe so. When one leaves the field, another one comes up. Sega left, here came Microsoft. If Sony leaves, here will come Valve.
Btw, the Xbox division is also threatened.
Here comes Sega with some brand new hardware! Yes!
This does not necessarily follow. Like Sony and Nintendo, Microsoft had an interest in gaming thanks to Sega, which prodded them to enter the space.
Google seemed to have a genuine interest in entering PC gaming via Chromebook OS, but it's not there anymore. It's in Valve's self interest to take control of their own platform, so that's one for us.
As it is now, the risks and costs associated to dedicated gaming consoles make it prohibitively expensive to come in, so Apple would never want in. Everyone who wants to enter gaming is doing so via Android, rightly or wrongly, because it's the cheap way in.
There is way to much competition for Sony outside of gaming. Usually when I go buy a PC the brands I look for first are Samsung, Apple, Dell etc. but never Sony. It's not because I don't like them, it's because I rarely hear about anything good regarding a Sony product. They need to turn things around fast or there might not be a Sony in the near future which is devastating to me because they are the ones that introduced me to gaming.
Might want to add in ASUS to that PC list Greenhawk. ASUS makes powerful computers for good prices.
Don't forget Alienware. A friend of mine got a decent rig during a sale this past Christmas
I think Sony is seeing more challenge in TVs, where they're trounced by brands like Samsung and Changhong, and smartphones, one of their few sure profit centers, but dwarfed by iPhone, Samsung, etc.
Yes. I just bought a brand new Macbook Pro and my wife got a Macbook Air. We have an entire ecosystem of Apple devices: computers, ipads, iphones, Apple TVs. Music, movies - just about everything - goes between those devices. Our HDTVs our Samsung.
*are
Mac Products are overpriced.
this is my point. macs are not beefy by any means. they are not powerful at all compared to other brands. but their image is different than the other brands so they sell to a certain person. this image is what company's aim for and sony has lost that image with the playstation. the walkman and disc man are a good example. they are considered outdated and consumers relate it to sony. sony has tried to revitalize the walkman image but is overshadowed by apple iPod. If sony isn't innovating they are following trends.
I disagree. Completely. Totally. Wholeheartedly.
http://www.pcmech.com/article/is-the-mac-overpric…
yea but that is price points. I'm talking about the image. all the specs the article are referring to mean nothing about what I'm talking about. woman won't buy an iPad or iMac for the specs. its an image they are paying into. the whole point I'm trying to make is sony is suffering from an identity crisis.and the reasons consumers pay for a macbook is not for the power or ease of use. they buy it for what is stands for.
I understand what you are saying and com
tjb, I understand what you are saying and completely agree with you. I was responding to the furious one. LOL
Yeah. I think Sony will eventually break up. The central conglomerate will be gone but several of their branches might survive as independent companies, like their life insurance, banking divisions, tv/movie, music, game console hardware/software (I think a broad entertainment division might be formed between these latter 3). At least, that’s what I think will eventually happen. All their other hardware (especially tvs) is as doomed as vitriolic Nintendoomers think Nintendo is doomed.
Just to clarify guys, what happened here is the last of the three credit rating groups, Moody's, decided Sony is junk status. Fitch and Standard & Poor already did this last year. This is just Moody's delaying the inevitable conclusion. Technically, nothing's changed with Sony, they were just struck by a huge dose of reality, esp post CES.
I genuinely believe Sony is more likely to bottom out or leave gaming than Nintendo.
But now Sony's debts as a company are more expensive. So it makes it harder to run the company and get outta debt
Comparing Sony's to Nintendo's budget status isn't even fair.
It's like comparing mold to gold.
Everyone should know that Nintendo is not going anywhere, and it has a MUCH higher chance of survival, and I mean near damn invincible, than Sony.
The real disservice here is made to Playstation fans, who are being conditioned to think that the 'next-gen wars' narrative actually matters. You ought to be grateful PS4 even got released, and be worried about the future.
The way I see it, is that the PS3 was the root of all Sony's current problems. When Sony placed so much money and effort to make the PS3 a success, the rest of their divisions were neglected by the upper management. The shame of it is that Sony was betting that the brand recognition brought on by the sales of their gaming division would bolster the sales of the others, namely the TVs and home stereos. I don'tknow what Sony could do to turn the other divisions around but I honestly don't think some of them can be.
It's actually more of an amalgamation of issues from all their divisions that's contributing to this problem.
First off, Sony's electronics division is having a tough time because they're unable to compete, due to lack of innovation in their products, and furthermore Sony's prices for their electronics are extremely unappealing for a lot of consumers, since competitors such as Samsung offers the same quality for half or 3/4 of the price. Sony also invested in a lot of products that didn't take off as anticipated as well, such as the 3DTVs, part of the problem is due to their short launch a few years right after they released HDTVs, why would consumers adopt 3DTVs when they just recently adopted the new HDTVs? Furthermore it costs $150 per pair of glasses, which scared consumers even more.
Secondly their entertainment division has been doing poorly. Most of their movies doesn't even recover their original budget, so they end up losing more from making most of their movies. So they keep on taking losses instead of financial gains from the entertainment industry. They even took a hit in sales from their attempt at installing hidden malware/spyware in their music CDs, since a lot of people lost a lot of trust in their music products.
Finally the gaming division is the only division I'm aware of that's actually earning some profits for Sony, but they took some serious damage from the first few years from the overpriced PS3, since they took a huge loss per console, and hoped people would instantly buy the games to cover it, which didn't happen for years. Now they're taking a loss again due to rolling out the new PS4s.
I'm well aware of everything you stated and I would like to clarify my statement of why I would blame the PS3 for Sony's current ills.
When you look specifically at there TV division, the bulk of there problem was in R&D. Sony's TVs were of the lowest quality yet demanded a premium price. All other TVs of equivalent price produced higher quality images and many TVs of higher prices sold greater amounts than those of Sonys(Sharp Aquos for example). Blaming the 3D TV fad for Sony's Bravia line being in such disarray is short sighted as the TV division was doing poorly, well before 3D TVs were on the market.
We then look at the Sony-Ericson division and we see the same issue as that of their TV division. A low quality product demanding a premium price. If we look at the cell phone market as a whole, Motorola, Blackberry and Nokia to some extent have all encountered this level of decline for the same reasons.
Now the entire music industry has been doing bad across the board for nearly a decade and wether Sony's anti-piracy measures worsened their situation, doesnt negate the fact that it was already on the decline. The poor state of their PC division in my opinion was due to a lack of advertising and an unwillingness to engage in a price war with the likes of HP, ASUS and Acer.
Now the reason I contribute the situations that led to a decline of these divisions to the PS3 is because of the exuberant losses sustained by the platform, which didn't make a profit for at least 4 years. Where would the money for proper R&D come from when your favoured division is losing over 1 billion dollars a year. Why would you engage in a second price war when you have yet to see any returns on the one you are already engaged in. My belief is that they failed to make the proper course corrections of those other divisions because they were so focused on making the PS3 a success. This in my opinion was brought about by a systematic belief that the success of PS3 would bolster the rest of their electronics divisions.
P.S I didn't address the movie division because I don't know enough about it to feel comfotable speaking on it.
lol NP about the movie division. I was merely using the 3DTV as one of many examples of their poor decisions in their electronics line.
Sony made a lot of poor decisions over the years, and they seriously need to learn how to turn things around. So far all they've done are measures for delaying bankruptcy, not actual solutions. Selling two of their headquarters, and cutting spending costs and employees doesn't help increase their profits, it's only temporary. Making actual quality products people want to purchase and keeping the prices competitive will actually help them.
Sony's proprietary memory requirements are also issues too
Good summary. I was about to add some of those points (particularly about the televisions) and I forgot the rest of those points.
I think broadly, Sony was innovative and coming out with very in-demand products- quality televisions, walkmans (anyone remember those?), CDs & DVDs (as part of a collaborative effort), and then the PS1 & PS2 (quality in concept and game library, not quite quality in hardware until 2 or so years after release though). But after the PS2, that ended and they became known for over-priced electronics that don’t merit the price. They’ve become a has-been.
sony is suffering an identity crisis. when people think of sony they don't think of high quality electronic products anymore. they think of the playstation. the fan boy status of playstation is what is hurting their image. to much focus in one area of their business and not enough in other area's. the playstation brand is hurting sony.
oh and there 4 k cell phone won't be a big hit. their projection screen on the other hand could be used in some cool ways but still way too early in it's development to be any use to us. so i don't think they are going to do any better.
I have aquestion
Nintendo is more vqlue than Sony or no?
Because actually many people said a lot of things about this and i actually very confuse.
From a solely game division vs game division- Nintendo is worth more (their ip's shit all over Sony's), from a perceived (i.e., how prospective buyers view the companies' buyability), Nintendo is higher valued.
NIntendo as a company as a WHOLE is valued more than SONY as a whole.
That statement refers to their stock value. This means if someone wanted to buy out either company it would cost more to buy Nintendo than it would be to buy Sony. When you look at the value of their assets, Sony is definitely worth more. Maybe even several times as much.
sony is a consumer electronics manufacturer and should be worth more than a game maker company. Nintendo has a larger market cap by over a billion dollars compared to sony. in other words Nintendo has a better business plan in place to help them make money. while sony has multiple departments that lose money and are dragging the company down. it just comes down to how they are managed. playstation may be making them money but if the other department don't than all that ps4 money is pointless. i don't see them recouping their tv. camcorder and camera sales and we will see another forecast slash. in all areas of sony. sad but this does not look good for sony at all. just read an article where sony is moving mass amounts of workers to Vancouver and if they don't go are laid off. sad. and it is for tax breaks thats it.
So..uh….where's my Dreamcast 2?
PS5.
Sites like IGN aren't even reporting on it. It shows the bias of the industry.
Really?
Uh oh! Mike! Mike! Mike! Mike! Guess what this means?!?!
Nintendoomed!!!!!
those dumbass Sony fanboys will disregard this news and continue to focus on Nintendo & Microsoft. someone should make a video about this article and upload it to YouTube. the more Sony bad news the better.
Sony is NOT stable. When you can't even afford to f up, and even launching a successful product causes your stocks to plunge and for you to lose money and value… there is something seriously wrong at Sony, and it is rotten.
They have debts up the ass
As much doom and judgement I can sh*t out on this article, I won't do it.
This was honestly utterly expected. Sony is selling the PS4 at a loss, they're STILL selling PS3's at a loss, and I won't even begin with the Vita. Sony is not doing so good in its other products, and they're continuing to sell buildings.
Nintendo is doomed, I guess.
Sony is not selling the PS3 at a loss.
Shit, my mistake. That means I won that idiotic argument back then!
Time to find that internet hero…..
Didn't the PS3 become profitable in 2011?
I don't see sony leaving the gaming industry. it's probably their biggest money maker right now. if anything they will refocus as a gaming dedicated company and drop the consumer electronics portion of it. they will try to be like Nintendo. if sony keeps trying to compete in all markets they will lose big time against apple and samsung. but for them to become a dedicated gaming company would require them to be bought out or kill their stock by restructuring their business model to gaming only will cause them to go bankrupt. 2014 will be very interesting indeed. i hope they can pull threw. one thing is certain, we have not heard the end of this subject.
If Sony dropped everything but the gaming division….they would be in a MUCH worse position. For one they wouldn't have the other avenues of income to fall back on if something like the PS3 happened again. Secondly….they wouldn't be profitable still considering their insurance arm is what is really keeping Sony afloat at the moment.
yes but for them to keep going with their current model will be stupid. none of their current products match up to the competition. they can keep competing but if they keep going this way they will be in so much debt they will continue to layoff and close down departments until it levels out and is more profitable. sony isn't known for their insurance. they are going to back their most well know product. fans are not running to get sony insurance. the problem is the image.sony produces good products but people look else where because they don't think of sony when they are buying other things besides playstation. why pay for a bravia with your playstation 4 when you can purchase or have already purchased a samsung for a fraction of the cost. when you purchased a ps4 you don't need the sony blue ray player or stereo. since you already have an iPhone you won't bother to look at sony specific phone. and their pc section is wholly looked over altogether. I don't see these departments coming out with anything must have in the future. even the new 4 k phones do not impress and I am not going to give it a second look. they will probably be expensive also with no development into the software tech right away. but its all speculation .
The most significant reason why Sony is competitive in the gaming industry is because they assemble their own hardware and in some cases manufacture them as well. If Sony were to drop out of the consumer electronics market in general, they wouldn't be able to sustain their factories with PS brand alone. Sony neeeds to turn around their TV and PC divisions at minimum to keep the PS brand viable.
like i said, I don't see that happening. they have to much competition dedicated to those category's. company's focused on TV's and PC'c can curve the cost because that is all they are investing in and can order larger amounts at a lower cost. that is why everyone is under cutting the cost of sony tv's and pc's. same thing happened to westinghouse long ago. they are still around but not a strong consumer electronics company like they use to be.
Sony's able to make their console competitive because they're full of ancilliary features and teh core.
That's how thtey get the third party support
For everyone saying that only their gaming division is making money is wrong. Their gaming division has been up and down sense the ps3. The last two quarters it’s lost 149 million followed by 8 million. The company as of the end of 2012 has a long term debt of close to one trillion (yen) and a short term debt of 80 billion (yen). The only division making money right now for them is their insurance division. All this info is at sony.net
Pretty damn much
Well Sony I pray to good you don't leave, I don't want anyone to leave. Your headphones and gaming systems have always been good. The PS4 IS a good consoles with Good games coming out later like infamous,driveclub,Destiny,Theorder. Any bad financial news for any big three makes me sad/angry because I don't want them to go this "competition" really brings us the best games possible! and Pushes them to do better. The 6th gen had some of the best competition,The best consoles,and the best games. I just want it to be like 6th gen,where nintendo catters to the "hardcore" and Primary Nintendo Fan audience,makes fun but challenging games, and could focus on Power. Sigh i just want a better industry. Some Third Partys can go bankrupt for all I care(EA,Capcom,Sqenix,activision). But Big 3? No… it'd be catastrophic.
The electronics giant of the 1990s has become the dying PlayStation company of today; very sad to see.
This started when Sony got into a "peter" measuring contest with Microsoft.
I hear if It gets worse Japan will try to bail them out.
Also Sony is going to do whatever it can to stay in all areas because they like to have control over their hardware, distribution, and where it goes. Like Nintendo except bigger. Losing some divisions also means further less brand awareness although Sony brand isn't as big as before.
That being how many divisions are failing right now I hear its at least 5 out of 9 or divisions. Then again I don't know how many divisions it has.
I knows Finance division makes the most money and so does music as well but that is all I know. Update on this?
And yes Playstation 4 isn't enough to break them apart or save them. Its no more than 10 to 15% revenue and of course of the entire company.
Hypothetically lets say Sony breaks apart. Where would playstation go? Bidding wars might occur. Nintendo? Microsoft? Anyone else as well?
sony has recorded a loss in their tv division for 9 strait years. that alone says something. that is just their tv department.
Bank of America Merrill Lynch. Sony’s TV business has lost money for nine straight years.