[A-List] Michael Hudson's Super Imperialism

["Michael Keaney" <michael.keaney@xxxxxx>]

Yesterday I asked:

Does the above have anything to do with the economic malaise that has beset
Japan since c.1990? Remember that prior to that, Japan the economic
powerhouse that people like Lester Thurow were holding up as the model of
sound economic policy and performance was beginning to flex its muscles, not
only through manufacturing superior quality goods, but by purchasing US
corporations, most notably Sony's acquisition of Columbia and Matsushita's
takeover of Universal.

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Moody's cuts Sony rating over profit concerns
By Bayan Rahman in Tokyo
FT.com: June 25 2003

Sony's troubles deepened on Wednesday when Moody's cut the Japanese consumer
electronics and games maker's credit rating, citing concern over how long
Sony would take to generate strong profits and cash flow again.

Moody's Investors Service, the credit rating agency, cut Sony's long-term
debt rating to A1, with a negative outlook, from Aa3 following a review that
began on May 1.

This is the first time in at least 17 years that Moody's has downgraded
Sony.

The downgrade means Sony is trailing rival Matsushita Electric Industrial,
the company behind the Panasonic brand, which still has an Aa3 rating.

Moddy's decision to downgrade reflects growing unease about Sony's ability
to recover. The company surprised investors in April by posting a loss in
the final quarter of last fiscal year and missing its full-year profit
forecast.

Since then the company has tried to reassure investors by announcing a new
restructuring just as its last four-year restructuring came to an end, and
unveiling new product prototypes. The group is withdrawing from non-core
businesses and increasing investment in semiconductors.

Strong competition and deflationary pressure have hit Sony's core business
of electronics products over the past few years. Sony has been able to
maintain a price premium because of its strong branding but that is now
changing as electronics move from analogue to digital, Moody's warned.

"A horizontal business model enabled by digitisation of audiovisual (AV)
products, where value added shifts from assembling finished goods to
(software and) content and key components, has caused prices for AV products
to erode so fast that even Sony's branding does not allow it to continue
enjoying profitability over an extensive period of time seen during the era
of analogue products," Moody's said.

Sony has a line-up of products, from mobile phones to digital televisions,
that would take advantage of the broadband era, but broadband networks have
not materialised to the extent imagined, another reason for lower profits in
Sony's electronics products.

Moody's said Sony's new A1 rating had a negative outlook because Sony's
strategy of focusing on key devices, such as semiconductors, and
restructuring might not make a significant impact on profits for some time.

"These measures will exert some impact, but it may take longer than expected
for them to significantly improve profitability because the broadband
network environment and the implementation of Sony's new focus on key
devices may not completely materialize in the short term," Moody's said.

The rating cut affects Sony's long-term unsecured senior debt. The company's
Prime-1 short-term rating is unchanged.