Standard & Poor cuts Motorola Ratings to Junk Status

Standard & Poor's Rating Service cut its long-term corporate credit rating on Motorola to 'BB+' from 'BBB', citing its 'operational challenges' that are not expected to fix themselves in the intermediate term. 

According to credit rater it will be harder for Motorola to borrow money to recover, as the cost of doing so has increased and it will result in lower profits, higher debt-to-earnings levels and diminishing cash flows. They also gave Motorola a recovery rate of '3' indicating the expectation for meaningful (50%-70%) debt recovery in the event of payment default.

Standard and Poor (S&P), a division of McGraw-Hill, is one of the top companies which publishes financial research and analysis on stocks and bonds. Motorola is also placed under review for possible rating downgrade by Moody's Investors service, where Motorola is currently just two notches above the junk status.