Tech & Biz

Motorola's Credit Rating: Junk Status

by Jordan Yerman | December 6, 2008 at 08:43 am

140 views | 2 Recommendations | 3 comments

Motorola's corporate credit rating was lowered by Standard & Poor's to one level below investment grade. In other words, junk status.

This rating drop is due to two years' seteady decline in mobile handset sales. This, in turn, is due to their stubborn attachment to the Razr, which is just... old. The iPhone, which is far more expensive, and only runs on one network in each of its markets, has surpassed the Razr in terms of sales, and this is a sure sign that something needs to change. Step awaaaay from the Razr!

The company's rating fell two levels, making it just one notch below investment grade, according to S&P. Moody's Investors Service said earlier this week that it may downgrade Motorola's debt to a level that is just two levels above non-investment grade.

These rating services are downgrading Motorola's credit and debt because the company's mobile handset business has been in serious trouble for more than two years.

And it doesn't look like things will get better for the company anytime soon. In late October, Motorola co-CEO Sanjay Jha told investors he doesn't expect the handset business to get back on its feet until at least early 2010.

Motorola released a Linux-driven handset, but not a smartphone. This would be a good area in which to experiment, as they have nothing to lose at this point, and they desperately need a hit.

By the way, the Sanjay Jha mentioned above is not to be confused with our very own Sanjay Jha.

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Paschen

at 09:02 on December 6th, 2008

Now I may sound silly here but what is Razr? Never heard off it.

Jordan Yerman

at 12:12 on December 6th, 2008

The Razr is Motorola's ultra-thin flip-phone, pictured above. When it debuted (something like 5 years ago), it was an industry-changing design. Now, though, it's a bit stale.

corbinse

at 14:42 on December 6th, 2008

This is really too bad I like thier phones.. wife has had the krazer I have been using the Q .. its not as up to snuff as my xv6700 but it does for daily uses they have a lot good products.