Moody\'s cuts Sony\'s rating to negative

Sony Corp, Japan\'s largest exporter of consumer electronics, had its credit-rating outlook slashed by Moody\'s Investors Service because of weakening demand for liquid-crystal display televisions as well as a stronger yen. The outlook was lowered to \"negative\" from \"stable,\" Moody\'s said in a statement yesterday, while retaining the Tokyo-based company\'s long-term debt rating at A3. Sony faces weakening demand for Bravia TVs after consumer sentiment in Europe and the US declined \"significantly,\" Moody\'s said. Chairman Howard Stringer has sought to end a seven-year 476 billion yen ($6.2 billion) loss from the TV business by outsourcing production to contract manufacturers and eliminating jobs as competition increases with South Korean rivals Samsung Electronics Co and LG Electronics Inc. The company \"may ultimately need to implement a major restructuring of this business,\" Moody\'s said in the statement. Given the negative outlook, an upgrade is unlikely in the short term, it said. Sony, the world\'s third-largest maker of TVs, fell 1.2 per cent to 1,588 yen at the close of trading in Tokyo, extending the losses this year to 46 per cent. The outlook change was announced after trading ended. Samsung is rated ‘A1\' by Moody\'s with a stable outlook, and LG is rated ‘Baa2\' with a negative outlook, according to data compiled by Bloomberg. Suwon, South Korea-based Samsung is the world\'s biggest maker of TVs, followed by LG, according to researcher DisplaySearch. Structural issues A return to a \"stable\" outlook will likely need evidence of Sony\'s ability to successfully address the structural issues, Moody\'s said. Sony will probably struggle to restore its money-losing TV business in a timely manner, even as the yen\'s appreciation against the euro pressures earnings, it said. \"If prolonged weakness in the global economy, the strong yen, the maturity of major digital AV products, or greater competition continue to pressure earnings and the company fails to restore profitability, then its ratings would be downgraded,\" it said. In July, Sony cut its annual profit forecast and said it may sell 22 million TVs in the year ending March 31, compared with an earlier projection for 27 million units.