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Samsung surges as Sony, Panasonic downgraded

updated 02:43 pm EST, Sat November 24, 2012

Samsung jumps 1.4 percent

South Korean electronics conglomerate Samsung continues to surge even as other Asian manufacturers are slumping, posting a significant jump in market cap over the past few days in the wake of bad news for Sony and Panasonic. Those two companies saw their credit ratings downgraded to junk status by rating company Fitch, with the rating agency expressing doubt in the ability of either to generate strong profits in the face of increasing competition. Meanwhile, Samsung's continually surging profits have pushed the company's stock up 36 percent this year, giving it a total market value of around $195 billion.

Reuters reported yesterday that Fitch had downgraded both Panasonic's and Sony's ratings on Thursday, pushing their creditworthiness into junk-bond territory. The other two major rating agencies, Moody's and S&P, rank the two Japanese companies at just above junk status.

Panasonic, according to Fitch, fares a little better than Sony, as Panasonic still "has the advantage of a relatively stable consumer appliance business that is still generating positive margins." Sony, meanwhile, has most of its electronic businesses in the red, and Fitch said that the company "[appears] to be overstretched."

Panasonic expects to lose $10 billion in the year to March 31. Sony forecast a full-year profit of $1.63 billion, though that figure is inflated due to the sale of a chemical business Sony owned.

Analysts see the decline of the two Japanese electronics giants as a boon for Samsung, which has grown to take a very strong position in the electronics sector. Bloomberg notes that Samsung is still rated at A+ by Fitch, with a stable outlook forecast.

The South Korean company's rise has been due in no small part to the success of its Android-powered line of smartphones. A recent analysis by Asymco found that Samsung's mobile division is more profitable even than the whole of Google, which develops the Android operating system that runs Samsung's devices.

by MacNN Staff



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