Standard & Poor's downgrades Sony

Credit rating agency Standard and Poor's on Wednesday lowered its rating of Japanese electronics and entertainment giant Sony less than a week after the company announced woeful results. S&P dropped its assessment of the firm's long-term credit worthiness to BBB+ from A-, citing poor earnings, price erosion, falling demand and stiff competition. The agency also said its outlook for Sony's long-term corporate credit rating was negative, based on the "view that severe circumstances in Sony's machinery electronics businesses make a strong recovery in earnings unlikely." "Sony's TV business has made repeated losses since fiscal 2004," the agency said in a statement. "The company's position in the global market is under strong pressure amid severe competition from Korean manufacturers and emerging Chinese companies." The agency also warned that it "could lower the ratings further if we see no meaningful sign of a recovery in Sony's earnings within six to 12 months." Last week, the technology giant more than doubled its full-year net loss forecast to 220 billion yen ($2.9 billion), up from 90 billion yen previously, in what will be its fourth consecutive year in the red. It logged a net loss of 201.45 billion yen for the nine months to December, down from a corresponding period profit of 129.22 billion yen a year earlier. Sony blamed difficult trading conditions in developed-country markets, the impact of severe flooding in Thailand, and the high yen as among the causes of the plunging numbers. The figures came as it was announced Welsh-born American Howard Stringer would be stepping aside as chief executive, to be replaced by his 51-year-old protege Kazuo Hirai. Stringer's years at the helm of what was once a world-beating company were marked by a series of setbacks. The firm that made the revolutionary Walkman has lost its edge in recent times, with mobile phones challenging its key games division -- which suffered an embarrassing hacking scandal -- huge losses in the firm's television business, and piracy threatening its music and film assets. Standard and Poor's indicated Wednesday some of the blame for the Sony's woes lay at the door of those who had driven its expansion. "Standard and Poor's believes the major reason for the extended losses is Sony’s strategy to aggressively expand its global market share despite strong competition, a massive erosion of prices, and its high cost structure compared with overseas competitors," the agency said. "Massive pressure on the prices of Sony's key products, such as flat-panel TVs and mobile handsets, is likely to continue. "In our view, an enhanced focus on profits, rather than on expanding sales, and efforts to lower costs are likely to reduce losses in its TV business." But, the agency cautioned, the situation was so dire that Sony's TV division could struggle for years to come. "Therefore, we see a low likelihood of a strong recovery in Sony's earnings in the next two years or so."