S&P May Cut Motorola's Long-Term Ratings
12.07.2007 15:39
Computers
- Source: Forbes
Standard & Poor's Ratings Services said Thursday it may cut Motorola Inc.'s long-term ratings, after the company warned that its cell phone unit will be unprofitable until at least 2008. Standard & Poor's placed Motorola's ratings, including its "A-" corporate credit rating, on CreditWatch with negative implications, which indicates the ratings may be downgraded. Motorola also warned that second-quarter revenue would fail to meet earlier expectations and that the company will report an operating loss due to weak cell-phone sales in Asian and European markets. Standard & Poor's noted that other Motorola business units are performing in line with management's expectations. The company forecast a loss from continuing operations in the range of 2 cents to 4 cents per share for the second quarter. Motorola also cut its forecast for quarterly sales to $8.6 billion to $8.7 billion from a prior target of about $9.4 billion. "The business faces aggressive expansion efforts by competitors at all price points and form factors, and is expected to continue assessing its cost structure while adjusting the balance of market share and profitability goals," Standard & Poor's wrote in a research note. Motorola's "A-2" short term rating is not on CreditWatch. Standard & Poor's said the company had cash and investments of $9 billion as of March 31, well in excess of funded debt. Standard & Poor's said it will meet with Motorola management to assess its plans to improve its cell phone business. Motorola shares rose a penny to $17.96 in midday trading. __________ Questions or comments about this story should be directed to the Financial News desk of The Associated Press at 212-621-7190. Copyright 2007 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed
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