Moody's Downgrades Sony Again

Moody's Investor Service has cut its credit rating for Sony

to Baa3, the lowest investment grade rating. Moody's also put Sony on negative watch. One more downgrade would reduce Sony's debt to junk status. "Without robust restructuring in the coming 12-18 months, Sony's non-financial services businesses will at best achieve roughly break even, and are also at risk of remaining unprofitable," the rating agency said in a report cited by

. “Today's downgrade is Sony's third this year by Moody's. Standard & Poor's has cut the company's long-term rating twice so far this year,”

noted. Sony has been struggling with losses in its television business as it has been unable to compete with Samsung Electronics

and LG Electronics

. In the games business, Sony's Playstation has been struggling against Microsoft's

X-box. One area where Sony has been making some headway is in mobile phones. In a survey by market research company Canalsys cited by

, Sony was the number three mobile phone manufacturer during the third quarter, beating out HTC

and Research in Motion

but well behind market leaders Samsung and Apple

. The

commented, “Sony has struggled to shift its focus from the increasingly unprofitable business of hardware manufacturing to the sort of integrated design, software and content-distribution model pioneered by Apple.” “Sony would be in even deeper trouble if not for its film and music businesses and its Japanese financial services arm,” the FT continued, “profitable areas whose earnings have partly offset its losses in electronics.” In a related story, Tim Schaaf, president of Sony Network Entertainment, who was recruited from Apple in 2005, has announced that he will be retiring at the end of the year. Sony's ADR is trading at its lowest level since June 11, 1987.