Financial Experts Call Motorola Junk: C’mon Sanjay Jha!
December 7, 2008 by Rico Mossesgeld
Filed under Cellphones
So last Friday, Standard & Poor’s downgraded Motorola’s rating to Junk, representing Motorola’s increasing riskiness as an investment. What this means for normal people is that it will now be harder for Motorola to borrow money to recover, as the cost of doing so has increased.
It’s easy to mark this development as yet another sign of Motorola’s decline from world #1 to near bankruptcy. But then again, to quote a cliche, when the going gets tough, the tough get going. There’s some optimism surrounding new Motorola CEO Sanjay Jha, based on his performance at Qualcomm. It’s quite possible that, as pressure mounts on Motorola to increase profitability and cut costs, it will finally dig itself out of the hole.
But as BusinessWeek rightfully reports: “a credit rating cut won’t make [Sanjay's] already tough job any easier.” Motorola still possesses some clout, technologically and financially. But the company has to change significantly for it to perpetuate any hope and lack of cynicism about its future. Worse, even if the manufacturer wanted to divest itself of its handset business, no willing buyer has come forward.
So there you have it folks: Motorola’s back is literally up against the wall. More than ever, each action or strategy implementation brings the company closer to dissolution or recovery.
