Standard & Poor’s lowered its long-term corporate credit rating on Motorola Inc. on Friday to “junk (bond) territory,” according to the Wall Street Journal.
S&P’s rating change was to “BB+” from “BBB.”
Moody’s Investor Services warned last week that it, too, may cut its credit rating on Motorola.
“The current rating action reflects continual operational challenges in the mobile devices unit (at Motorola), which are not likely to be reversed over the immediate term, leading to depressed profitability,” wrote S&P analyst Bruce Hyman.
The move may make it more difficult for Motorola to raise credit in a credit-strapped economy while it attempts to revive its mobile devices business, which has struggled for profitability.
S&P also said it is forecasting a 10% drop in mobile-phone sales in 2009 over 2008, while average selling prices continue to drop – conditions that make Motorola’s challenge even tougher.
Motorola credit ‘junk’
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