S&P drops Motorola to junk

Standard & Poor's said it lowered the long-term corporate credit rating on Motorola Inc. to BB+ from BBB. Ratings were removed from CreditWatch, where they were placed with negative implications July 12, 2007.

The company's senior unsecured debt was downgraded to BB+ and assigned a recovery rating of 3.

The outlook is stable.

"The current rating action reflects continual operational challenges in the Mobile Devices unit, which are not likely to be reversed over the intermediate term, leading to depressed profitability and returns, adjusted debt leverage over 4x, and substantially diminished free cash flows," S&P analyst Bruce Hyman said in a statement.

Ratings reflect the company's anticipated performance as a single economic entity, given the uncertainty surrounding the separation of the mobile devices unit, the agency said.

Ratings also reflect the company's expected subpar profitability for the balance of 2008 and much of 2009 in a weak market, significant operational challenges facing the mobile devices unit as it redefines its product portfolio and cost structure, and generally limited market positions for the Mobile Devices and the wireless infrastructure units, the agency noted.

The company's substantial liquidity and its solid positions in broadband access and private radio systems partly offset these difficulties, S&P said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.