Standard & Poor downgraded Motorola stocks to junk status on Monday, as the business continued to suffer from low handset sales and the threat of a general slowdown in the industry globally. The company’s rating was slashed from BB+ to BBB, placing the manufacturer one cut below investment grade.
Last Tuesday, rating’s agency Moody’s threatened to downgrade Motorola from one of its lowest ratings, Baa2.
Standard and Poor’s Bruce Hyman commented in a statement: “Revenues and profits in the first part of the year will be challenged by a narrower, somewhat-dated product portfolio. Standard and Poor’s also expects about 10% fewer handsets to be sold worldwide in 2009 at lower average prices than in 2008.”
Motorola has lost around $2.8 billion since the beginning of 2007, which has pushed it to announce the up and coming spin off of its mobile division. However, poor performance has delayed the spin off for a year already.
In October, Motorola announced its intention to cut 3,000 jobs and to put the brakes on a spin off of its mobile phone division again, following an almost $400 million loss during the third quarter for 2008. At the time, revenue dropped 31% to $3.1 billion in that quarter when consumers stopped buying its devices.