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Sony’s in a spot of credit trouble

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Former PlayStation boss Kazuo Hirai is now the boss of Sony as a whole, and he has the unenviable task of streamlining the Japanese giant’s operations and making the company profitable again. It’s no mean feat; while the PlayStation brand is relatively afloat, the same can’t be said for the rest of the company, who’s seen its TV, camera and AV business lose market share to Korean companies like Samsung and LG.

Sony’s been dealt another blow; Moody’s Investors Service has lowered the company’s long-term credit rating to the lowest possible investment grade, Baa2, giving it a negative outlook and urging investors to stay away.

This follows the company’s seventh straight quarterly loss and fourth straight annual loss, resulting in the company’s short-term credit similarly being downgraded. Right now, Sony’s in a bit of a financial hole – and won’t even be able to rely on credit to drag it back out.

“Overall earnings will stay weak due largely to prolonged operating losses in TVs and mobile phones, as well as significant declines in earnings from digital imaging products and games,” Moody’s said in a statement. “The company is not expected to reduce debt significantly without resorting to cuts in capital expenditure or the sale of non-core assets.”

Sony will be slashing 10 000 jobs and selling of a number of its non-core business to concentrate on mobile devices like tablets, gaming and digital imaging as part of Kaz’s “One Sony” strategy. Personally, I think they should go the other way and re-launch the PlayStation brand as its own entity, safely tucked away from Sony’s crumbling fortunes.

There’s a lot of speculation that Sony’s financial troubles could mean that, unless things turn around rather quickly, the next PlayStation could be the last. Whether you love or hate Sony, a gaming world without PlayStation is a poorer one.

Last Updated: November 12, 2012

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