Not Panasonic, Sony risk greater: Fitch

Panasonic Corp has a better chance than rival Sony Corp of surviving Japan's consumer electronics slump because of its unglamorous but stable appliance business of washing machines and fridges, credit rating agency Fitch said Friday.

Fitch cut Panasonic's rating by two notches to BB and Sony three notches to BB minus on Thursday, the first time one of the three major ratings agencies have put the creditworthiness of either company into junk-bond territory.

Rival agencies Moody's and S&P rate both of Japan's consumer electronic giants at the same level, just above junk status. Moody's last cut its rating on Panasonic on Tuesday. Panasonic "has the advantage of a relatively stable consumer appliance business that is still generating positive margins", Matt Jamieson, Fitch's head of Asia-Pacific, said in a conference call on Friday to explain its ratings downgrades.

But at Sony, he added, "most of their electronic business are loss making, they appear to be overstretched. "Japan's TV industry has been bested by cheaper, more innovative models from Samsung Electronics and other foreign rivals, while tablets and smartphones built by Apple Inc have become the dominant consumer electronics devices.

Investors are focusing on the fate of Sony and Panasonic after another struggling Japanese consumer electronics firm, Sharp Corp, maker of the Aquos TV, secured a $4.6 billion bail-out by banks including Mizuho Financial Group and Mitsubishi UFJ Financial Group. Sony and Panasonic have chosen divergent survival paths. Panasonic, maker of the Viera TV, is looking to expand its businesses in appliances, solar panels, lithium batteries and automotive components.

Appliances amount to around only 6 percent of the company's sales, but they generate margins of more than 6 percent and make up a big chunk of operating profit. Sony, creator of the Walkman, is doubling down on consumer gadgets in a bid to regain ground from Samsung and Apple in mobile devices while bolstering digital cameras and gaming.

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