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Sony fights back
Sony has transformed entire categories of electronics with products such as the Walkman, the first transistorized television and the PlayStation game console among many others. However, the company has posted losses for four consecutive years and recorded eight years of loss within its TV division.
The rise and success of rival brands such as Samsung and LG has been damaging to Sony. Sony’s name has faded with consumers. In addition to this, Japan has also been subjected to many natural disasters and in recent times, the appreciation of the yen against the US dollar has caused further damage to Sony’s profit as this reduces income from exports.
Fitch downgraded Sony’s Long Term Foreign and Local Currency Issuer Default Ratings (IDR) to BB (considered low quality credit and referred to as junk bonds) from BBB (medium credit quality and considered investment).
However, new CEO Kazuo Hirai has made it clear that ‘Sony will change’ and has set out a range of initiatives including the turnaround of their television division. Through cutting fixed and operating costs, Sony aims to make its TV business profitable again by the fiscal year ending March 2014.
Sony also plans to expand its business in emerging markets. Sony Corporation held the largest market share in flat-panel TVs in India with 34% in 2011. Sony’s success in India underlines how Japanese manufacturers that are in financial crisis in established markets, such as the US and UK, are still growing in countries such as India and China.
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