S&P Trimmed Sony Rating: Further Downgrades on the Horizon?

Standard and Poor slashed its long-term debt rating on Sony Corp (NYSE:SNE) on Wednesday to BBB+, and admonished that it may trim the electronics titan even more within a year if the company can’t turn its profitability around, reported Reuters.

The downgrade gives incoming CEO Kazuo Hirai, 51, even more cause to work quickly at stemming losses, especially in the company’s ailing television unit. Falling demand and fierce competition from foreign rivals led by Samsung Electronics has the unit is poised to experience its eighth consecutive year of losses, Reuters said.

With the lower rating, Sony has to pay investors more to borrow or refinance loans. In a statement, S&P said it may cut the ratings even more if Sony shows no “meaningful sign of a recovery in earnings” within the coming six to 12 months, according to Reuters.

S&P blames the long run of losses on Sony’s aggressive expansion of its global market share in spite of formidable competition, a severly deteriorating prices and a cost structure which is high in comparison with overseas competitors.

In its earnings announcement on February 2, Sony announced it was looking at a larger-than-expected loss of $2.9 billion in the year ending on March 31.

Hirai succeeds Howard Stringer as the firm’s chief executive on April 1. Hirai has been with the company for 28 years and is best known for renewing the profitability of the PlayStation gaming unit.

Here’s how shares of Sony are reacting to the news:

Sony Corporation (NYSE:SNE): SNE shares recently traded at $19.90, up $0.01, or 0.05%. They have traded in a 52-week range of $16.16 to $36.97. Volume today was 472,244 shares versus a 3-month average volume of 1,347,960 shares. The company’s trailing earnings are $-7.66 per share.

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To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com