S&P Cuts Sony Credit Rating

Standard & Poors has lowered Sony's (NYSE: SNE) credit rating by one level after SNE widened its loss forecast for the current fiscal year due to falling prices, demand reduction and increasing competition.According to Bloomberg, Sony's long-term ratings were lowered to BBB+ from A-. BBB+ is the ratings company's third-lowest grade.The downgrade follows downgrades by Moody's and Fitch over the past two months, as Sony endured an end to 2011 and start to 2012 that it would like to put behind it. Last week saw SNE more than double its annual loss forecast to 220 billion yen ($2.9 billion).Moody's gave Sony a Baa1 grade, also its third-lowest investment grade. Fitch gave it a BBB- grade, which is one level above junk.Times are tough when a once-great company is now considered slightly better than garbage.J.P. Morgan pointed out that the natural disasters had hit SNE hard, but there was a decline in competitiveness. “Even excluding the impairment loss on Sony's S-LCD stake (¥63.4 billion) and valuation allowance for deferred tax assets at Sony Ericsson (¥33.0 billion), operating profit was still down sharply YoY at only ¥4.7 billion. We attribute this mainly to widening losses in the TV business (to ¥35 billion vs. year-earlier loss of ¥22 billion), plus margin erosion in the digital camera, PC, component, and professional solutions businesses owing to yen appreciation ...

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