Sony and Panasonic credit ratings slashed to "junk" status

Television market is cause for concern

Sony and Panasonic have had their respective credit ratings cut to "junk" status after lack of innovation and poor demand for products

According to ratings agency Fitch Ratings, the two Japanese companies are struggling to match the innovations coming from rivals like Apple and Samsung.

So much so that both Panasonic and Sony have had their credit ratings cut to "junk" status. Sony's was cut to BB-, three steps below investment grade, while Panasonic dropped two levels to BB.

Both companies have seen shares sink to their lowest levels for 30 years this year, and we're fairly sure this latest news isn't going to be helping matters.

“The future of both companies will depend on their ability to curb loss-making segments and rediscover the kind of technological leadership, which historically enabled them to develop must-have products,” said Steve Durose, Fitch’s head of technology ratings for the Asia-Pacific region."

Sony is the higher risk of the two, hence its lower rating.”

One area that has been particularly tough for the companies is in the television market. Sony's 8.4 per cent of the global TV market share dropped to 7 per cent the previous quarter while Panasonic also dropped from 6.8 per cent to 6.2 per cent.

Sony's drop in value has been staggering. Back in 2000 the company was worth more than $120 billion - today that figure has shrunk to just over $8.5 billion. By way of a comparison, Apple is currently valued at $528 billion.

Predicatably, both Sony and Panasonic are now looking at axeing jobs and selling off manufacturing facilities in an effort to curb costs. Panasonic has already announced that 10,000 jobs will go by March 2013.

Sony meanwhile will need a serious injection of innovation over the next year to reclaim former glories though, so lets hope the PS4 is really something special.

Via: Bloomberg