Credit rating agency Fitch has slashed Sony's credit rating from BBB- to BB-, relegating it to 'junk' status -- a term used to describe operating below investment grade ratings, or a company at risk of default. "This wasn’t an easy decision,” said Matt Jamieson, the Seoul-based head of Fitch's corporate research. "But their reputations have been hit so much that it’ll take a long while to crawl back."
Sony has suffered massive losses as of late, not just in its game division, but across all of its product line, particularly with Televisions, with Samsung dominating 25% of the market compared to Sony's 7%.
According to Fitch, recovery is possible, but it will be a timely process.
"Meaningful recovery will be slow, given the company’s loss of technology leadership in key products, high competition, weak economic conditions in developed markets and the strong yen," said Fitch, in a statement explaining the decision.
According to Steve Durose, Fitch's head of technology ratings for Asia-Pacific, that recovery will is dependent on Sony's ability to "curb loss-making segments and rediscover the kind of technological leadership, which historically enabled them to develop must-have products".
Sony's has been struggling to gain footholds in multiple different markets. Sony's home entertainment division is seen as a massive weakness for the company, a weakness that will hopefully be offset by it's relatively stable music and movie divisions.