S&P Puts Sony on Negative Credit Watch

Company has struggled under the weight of a strong yen, in addition to wrestling with the aftermath of the earthquake and tsunami and now Thailand's floods.

After the electronics giant warned it expected to slide to its fourth straight annual loss, Standard and Poor's on Nov. 4 put Sony Corp. on a negative credit watch.

The rating agency placed its "A-" long-term corporate credit and senior unsecured debt ratings on Sony on watch with negative implications.

"The likelihood of Sony's weak earnings persisting has increased as there are no signs of a halt to the deterioration in the earnings of the company's core flat panel TV business," S&P said.

"In addition, Sony's financial burden is likely to increase in tandem with the company's making Sony Ericsson a wholly owned subsidiary," it said. "We need to review the prospects for Sony's operating and financial performance."

On Nov. 2, Sony projected an annual net loss of 90 billion yen (US$1.15 billion) reversing a July forecast of a 60 billion yen net profit, after the company slumped into the red during the first-half.

The maker of PlayStation consoles and Bravia television sets has struggled under the weight of a strong yen, while wrestling with the aftermath of the March earthquake and tsunami and now Thailand's floods that have hit production.

In the second quarter alone, the firm slumped to a net loss of 27 billion yen compared with a 31.1 billion yen profit in the same period a year earlier.

Copyright Agence France-Presse, 2011

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