Rating company Fitch has been the first group to downgrade Sony stock to 'Junk' status. The company lowered its rating of the company to BB-. 'Junk' status generally refers to anything of a rating of BB or lower. This means a high risk of default and very little chance of any short term or medium term gains.
The downgrade to 'junk,' "reflects Fitch's belief that meaningful recovery will be slow, given the company's loss of technology leadership in key products, high competition, weak economic conditions in developed markets and the strong yen," said the ratings group.
"The future of both companies will depend on their ability to curb loss-making segments and rediscover the kind of technological leadership, which historically enabled them to develop must-have products," Steve Durose, Fitch’s head of technology ratings for the Asia-Pacific region, said in a statement. "Sony is the higher risk of the two, hence its lower rating."
Sony CEO Kazuo Hirai is cutting 10,000 jobs and is moving Sony away from it struggling TV division. He is focusing on the companies mobile devices, games and digital imaging to turn the company around. Sony has sold stakes in two display making ventures, which is after the company has lost 692 billion yen ($8.43 billion) in its TV division in the last eight years.