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Sony Corporation Message Board

  • chickentraderr chickentraderr Nov 1, 2013 12:34 PM Flag

    Moody's to downgrade SNE credit rating

    "Moody's has placed Sony Corporation's Baa3 long-term senior unsecured bond and issuer ratings on review for downgrade. The rating actions reflect the slow progress being made in improving overall profitability. Weak earnings across the majority of reporting units suggests the potential for a much longer period of restructuring and financial weakness than previously expected, Moody's added."

    Anyone think they're blowing smoke?

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    • The last few quarters were better for sony than usual, it would be odd for moodys to downgrade credit worthiness for a single down quarter with 2 up quarters previous especially with a major product launch coming up. A credit downgrade shouldn't come from only a quarter worth of data where the main shortfall was the movie section having a bad run of flops.

      • 1 Reply to steel90
      • Also, those good quarters were not because of good operations and sound returns. The previous was due to the unexpected depreciating Yen when compared to last years quarter year-over-year, and the one before that was due to the assets sale they were doing and managed to record it as operating income which resulted in positive return, and overall positive earnings for that fiscal year. It was manufactured returns, and it was clear as day (even to me, which I did not act upon cause I was too positive about their future, which I was gravely wrong about), but the market kept on being optimistic cause some of their product lines were doing really well in the market.

        So looking at the fundamental business, it still wouldn't be profitable if it weren't for the macro factors and the brilliance of Sony's accountants in recording asset sales as operating profit.

        Again, I'm not a bear here and I'm not shorting Sony, I actually lost a lot of money yesterday and today (now I'm out). But I have to call it like it is. Sony is not yet in growth mode as we were led to believe by management. Maybe in some areas (e.g. Xperia mobile line) but most areas are still deeply in the red (e.g. TV, Cameras, PCs).

    • Chickentrader, I know you genuinely care about this investment, as I do too because I lost a lot of money, but I don't think they're blowing smoke.

      I studied SNE's financials thoroughly (as you can, too) and I found as Moody's did that SNE is too leveraged! Too much borrowing, bond issuing, stock issuing, they borrow left and right, and there's not conscious in management's part not to lose this borrowed money as we can see in this last quarter and the last few years. Their balance sheet is huge, and their margins are razor thin. Ask yourself a question, if this was a regular store, with this amount of leverage and small margins, would you own part of it? I wouldn't, that's why I bit the bullet and sold my shares with 25% loss.

      Look at it like this, last fiscal year they only posted a profit in last quarter to offset the losses from the other three quarters by selling assets, not profitable operations! Also, first quarter in current fiscal year only posted a profit due to the depreciating Yen. This recent quarter they posted a loss bigger than last year's quarter (year-over-year) which means even with depreciating Yen helping the results, it still posted bigger losses! It seems the company is still shrinking and not growing yet. Even the projected income for this fiscal is smaller than last fiscal year, which indicates deteriorating business. Sony is not growing, they're still in deep trouble.

      And please don't talk about the PS4, as you can see they already projected 5m units sales in the upcoming quarter, which is very optimistic, and even with that we still have fiscal year income -40%. Also, gaming division is less than 8% of total revenue, and in best cases it's 10%. It's not big enough to make a difference.

      What's holding them up now is the financials and only due to the Japanese bull market (they mention this in their release), so what's gonna happen when the Japanese market stops growing? Financials will not hold SNE any longer.

      Good luck.

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