Consumer electronics maker Sony Corp. (NYSE: SNE) is just one step away from having its bonds rated as “junk” by ratings firm Moody’s Investors Service. The ratings agency this morning cut its rating on Sony’s senior unsecured bonds from Baa2 to Baa3, just barely within the company’s investment-grade ratings. The ratings outlook for Sony is “negative.”

At the end of last month S&P took similar action on Sony’s debt rating. And like S&P, Moody’s is mainly concerned with Sony’s faltering TV business:

[O]verall ear[n]ings will stay weak due largely to prolonged operating losses in TVs and mobile phones, as well as significant declines in earnings from digital imaging products and games. The continued negative ratings outlook reflects Moody’s view that without robust restructuring in the coming 12-18 months, Sony’s non-financial services businesses will at best achieve roughly break-even, and are also at risk of remaining unprofitable, after excluding equity losses, non-recurring expenses, as well as one-off gains.

The Moody’s report is a litany of Sony’s problems: operating profits are way down and will continue to fall “as the growing use of smartphones increasingly cannibalizes the market for compact digital cameras and portable game players.” And the company is nowhere in the smartphone market: “Intensifying competition and the company’s current weak position in smartphones will make it difficult to gain market share and improve its margins quickly.”

Sony’s shares are trading up 0.6% in early trading at $10.97, in a 52-week range of $10.87 to $22.35.

Paul Ausick

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