Fitch: Sony More Likely to Sink Than Panasonic
November 24, 2012 8:40 PM
comment(s) - last by
Panasonic will likely survive because it focuses on more than just consumer electronics
A credit rating agency said that Panasonic would likely survive longer than Sony after downgrading both electronics companies.
Credit rating agency Fitch recently lowered Panasonic's rating down two notches to BB, but cut Sony down three notches to BB minus. Other credit rating agencies have put them at the same level.
The reason for Fitch's credit ratings? It claims Panasonic has a "relatively stable consumer appliance business," such as refrigerators and washing machines, aside from just consumer electronics. Sony, on the other hand, is mainly depending on the extremely competitive consumer electronics market.
Right now, tech giants like Apple and Samsung have a strong hold on the electronics market, such as smartphones and tablets.
Sony's troubles largely stem from its failing TV business. It has seen eight straight years of quarterly losses, and last December, Sony decided to shake up its TV division by
negotiating a buyout
of its 50 percent manufacturing stake with Samsung in the LCD joint venture. It also
split its TV division into three units
consisting of sales of LCD TVs, outsourcing manufacturing to cheaper foreign facilities and developing future TVs.
To make matters worse, Sony reported a
record annual loss of
$5.7 billion USD
in May 2012.
However, new Sony CEO Kazuo Hirai has been working to turn the company around since he took over in April 2012. In fact, he offered an entirely
new plan for restructuring the company
. A key idea behind the restructuring was to strengthen core businesses, including digital imaging, games and mobile. He also opted to take over the failing TV business, expand business in emerging markets, create new businesses and realign the business portfolio.
Just last month, Sony
closed a factory in Japan and cut 2,000 jobs
at its Tokyo headquarters.
While Hirai is trying to make Sony profitable again, Fitch said "most of their electronic business are loss making" and "appear to be overstretched."
Fitch said Panasonic, on the other hand, is focusing on areas other than consumer electronics like home appliances, lithium batteries, solar panels and automotive parts.
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RE: my analysis
11/26/2012 4:09:41 AM
Wow, post truth that is reiterated by others, fanboys downvote post from 3 to -1. Some people be mad...
RE: my analysis
11/26/2012 3:22:40 PM
It's because you mentioned Apple. Forget the fact that your points were valid and your example a good representation of your points. You mentioned Apple. Shame on you.
On a more serious note: I agree with you that Sony needs more focus. They need to cut what isn't working and reallocate resources to what they can make work. They don't need to be as focused as Apple. After all, being too focused makes you vulnerable to market failure. However, spreading too thin saddles your successful ventures to the failure of your loss leaders as you try to prop them up.
As far as displays are concerned, Sony needs something new. They've already ruined their perceived superiority in the eyes of consumers. They need to make something that isn't currently on the mass market: Super high res displays, refresh rates that leave others in the dust, imperceivable input lag, or even bringing new display tech to mass market (I'd love to see OLED based TVs and monitors available in mass). Then they need to market the crap out of the superior features to restore their name as an innovator. They'll never get ahead while playing follow the leader.
"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007
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