Sony, Panasonic debt ratings cut on TV losses
By Isabel Reynolds
TOKYO (Reuters) - Japan's Sony and Panasonic both had their debt ratings downgraded on Friday by Moody's Investors Service, which cited concerns about continued losses in their TV divisions, two weeks ahead of their earnings announcements.
Sony will find it hard to meet its target of pulling its TV division back into profit in the next two years amid harsh competition and the strong yen, despite pulling out of an LCD panel joint venture with Samsung Electronics, Moody's said.
It said Panasonic's financial profile had deteriorated since it bought out its two major consolidated subsidiaries, Sanyo Electric and Panasonic Electric Works, last April.
Sony's rating was cut to Baa1 from A3 and Panasonic's to A2 from A1, with the outlook negative for both.
Sony has said it expects to make a loss of 175 billion yen ($2.27 billion) on TVs in the year to March but aims to halve that loss next year and make a profit on them in the year after that, after nine straight years in the red.
Sony Ericsson, the company's phone joint venture, also posted an unexpected loss this week, casting a shadow over Sony's plan to take full control of the business next month in a bid to better compete with Apple Inc and Samsung.
Unless a significant improvement in Sony's financial profile seems likely in the year starting on April 1 its ratings could be reviewed for action in a relatively short time, Moody's said.
Panasonic's net debt rose to about 550 billion yen in the year ended last March 31 from about 100 billion yen the previous year, Moody's said. Continued...