Sony Shares Tank After Earnings Revised

For the past few years, Sony has struggled to keep up with its contemporaries not only in that quality of products released, but in making money for its shareholders. That all changed when it posted its first annual profit in five years in May of this year. However, on Friday Sony’s shares dropped 11 percent due to it dropping its earnings forecast by a huge 40 percent based on slow…

 

For the past few years, Sony has struggled to keep up with its contemporaries not only in that quality of products released, but in making money for its shareholders. That all changed when it posted its first annual profit in five years in May of this year.

However, on Friday Sony’s shares dropped 11 percent due to it dropping its earnings forecast by a huge 40 percent based on slow sales in the television, PC and camcorder market. Its predicament was not helped by its film division doing a lot worse than anticipated with the likes of White House Down and After Earth flopping at the box office.

There are hopes that the much-anticipated PS4 roll out will add a bump to its earnings, however gaming consoles have never been a traditional big earner for the company, but with over one million pre-orders it is hoping this will be a precursor to an anticipated five million sales of the console between now and March 2014.

To add to its woes, ratings agency Moody's said it had placed Sony's Baa3 long-term senior unsecured bond rating on review for a downgrade. Baa3 is the agency’s lowest investment-grade rating.

"The rating actions reflect the slow progress being made in improving overall profitability,'' Moody's said in its statement. "Weak earnings across the majority of reporting untits suggests he potential for a much longer period of restructuring and financial weakness than previously expected."

Sony was the first Japanese company to appoint a foreign CEO in the form of Sir Howard Stringer, but after he failed to stop the company’s slide, they brought in long-serving employee Kazui Hirai. Since February 2012, it looked like he might have stopped the rot, but now seems like he has also failed to halt the company bleeding money.

 

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