Moody's puts Sony on review for credit downgrade

TOKYO (AP) - Moody's Investors Service put Sony Corp. on review for a possible credit ratings downgrade Monday, citing doubts about the troubled electronics company's revival plan announced last week. 

The review reflects concern that Sony's mid-term business plan will be unable "to regain the strong profit and cash flow generation patterns seen in its past,'' Moody's said in a statement, adding that the survey could lead to a downgrade of the A1 ratings of Sony and its supported subsidiaries. 

That's four rungs below the top rating, Aaa.Sony's new chief executive Howard Stringer unveiled the sweeping turnaround plan on Thursday centered on cutting jobs, closing plants and shedding unprofitable businesses. 

The shake up calls for slashing 10,000 jobs, or about 6 percent of Sony Corp.'s global work force by the end of March 2008.  

It will also close 11 of its 65 manufacturing plants and shrinking or eliminating 15 unprofitable electronics operations by the same deadline.  

Sony refused to say what those businesses were. 

Moody's said that prices for consumer electronics products have been declining so fast that Sony's ailing electronics business has recorded successive operating losses in the past two years, despite earlier attempts to bolster business by shutting factories and cutting jobs. 

"In its review, Moody's will examine how quickly Sony can recover the profitability of its electronics products segment and whether the other segments can sustain the group's overall profitability,'' Moody's said. 

Aside from the cost cuts, Sony said it would now focus on so-called "champion products'' including the PlayStation 3 next-generation video-game console, Bravia liquid crystal display televisions and the Walkman MP3 music players - which have fallen miserably behind Apple Computer Inc.'s iPod. 

Analysts generally were not impressed by the plan, saying it lacked vision and creativity.  

Instead of deciding on spin-offs or outlining a clearer way of piggybacking its electronics units with its entertainment arm, Sony's proposal sounded much like other plans to streamline the corporate structure to eliminate redundancies, they said. - AP

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