Sayonara SONY

It's a mystery!

Well, like most companies in this position, it really depends on a few factors:

1. How much cash do they have on hand.
2. How well are they executing on their plan to get back to profitability.
3. How much short-term debt they have to make good on.

All of the above factors (and more), of course, should have been taken into account by Moody's before the downgrade, so the question is: will SONY be profitable at its next annual report? If not--if they are still sucking wind--they are going to be in serious trouble since it'll be pretty clear at that point that they are every bit the high risk the bond rating agencies say they are, and that'll mean a few things:

1. They won't be able to raise money from the bond markest at anything less than extortionist rates. (This is, technically, why bond rating agencies exist so, on paper, they should already be paying through the nose, but it doesn't necessarily work like that, but it *will* if thye come in on another report like the last several.)
2. If they don't have sufficient cash on hand or assets to fob off (like their chemicals business, which was the only thing that kepth their last annual report looking like the stuff of nightmares), and they can't raise money from the bond markets, they go bankrupt in some fashion (or sell).

Kaz Hirai (the ex-prez of the PlayStation division) has been slashing employees left and right, and trying to get rid of the massive loss-making TV division, but all of those things take time--at the same time, however, SONY is also having a real problem competing in any of the sectors in which they offer products, with a thin slice of the camera market being the only real, short-term, bright spot (OKOK: they have a solid phone biz in Japan, but that's not nearly enough.)

Needless to say, I don't think they're going to make it.

The best case scenario is that they start spinning off businesses (the ones they can, of course--the TV division is dead weight, for example), but Hirai is going to want to wait until he has no other options before jettisoning the only life rafts the company has (like the games division, which is suddenly looking shaky, too).

So I say again: it'l take an act of God to prevent SONY from being basically unrecognizable in 1-2 years--there might every well still be a company named SONY, but it will be a much smaller, much leaner, much meaner corp, *if* it makes it through, ideally focusing on phones, games, tablets, cameras, etc., recapturing some of the magic of 80s and 90s SONY in the process.

I had no idea how the tablet market appeal was really growing until I was at IAAPA last week and found that both Sega Amusements and Namco America have created some licensed tablets and netbooks that they have done as a way to offer prizes in their prize merchandiser machines. Sega's was cheap to, only $75 for an Android tablet.

But I agree with your point that the PS9 much less the PS4 is not happening. The amount of capital needed to do a game console launch like that will mean more debt and more risk on top of a debt and risk-laden situation to begin with. If a PS4 did happen, I imagine it being less of an upgrade to the PS3 than the WiiU is to the Wii. I don't see how they can reinvent their game console from scratch again. Not unless they have a true death wish and I think that they know it.

Aaaaand hello junk status:

Ratings agency Fitch downgraded the debt ratings of Japan's Sony Corp and Panasonic Corp to "junk" status citing weakness in their consumer electronics and TV operations, further diminishing the luster of the once-great Japanese brands.

The cut to below investment grade, the first by a ratings firm, comes as the floundering Japanese tech giants face weak demand and fierce competition from Apple Inc and Samsung Electronics.

A strong yen and bumps in China, where growth has slowed and Japanese goods have been targeted in sometimes violent protests recently, have also weighed on their earnings.

The two companies, along with Sharp Corp, racked up combined losses of $20 billion last year, leading them to axe jobs, sell assets and close facilities.

Sharp, btw, is pretty much 100% doomed. Sony and Panasonic, at this rate, will end up merging and still being half the size of Apple and Samsung.

(In other news: Sony Now With Extra Fucked!^TM)