Feeds

Moodys cuts Nortel and Lucent ratings (again)

Networking junkies

  • alert
  • submit to reddit

Mobile application security vulnerability report

Credit rating agency Moody's Investors Service delivered a bleak verdict on the telecom equipment sector's prospects on Friday, when it downgraded Nortel Networks Corp and Lucent Technologies Inc from junk to even junkier.

The rating on Lucent's senior unsecured and senior implied debt was cut from B2 to Caa1. Lucent's trust preferred stock was cut from Caa1 to Caa3, and preferred stock from Caa2 to Ca. Nortel's senior secured and senior implied rating was cut from Ba3 to B3, and its preferred stock from B3 to Caa3. Bonds rated by Moody's at Ba or below are considered to be in the junk category. The outlook for both companies was rated negative.

Moody's used eerily similar language when describing the problems facing both companies. It said that the downgrade reflected the severity of the decline in each firm's revenue base, their cash burn rates and the "lack of clarity regarding the nature and timing of a rebound in revenue." It also cited reduced liquidity sources in the case of Lucent and diminished financial flexibility in the case of Nortel.

Offsetting the bleak prospects facing both firms, Moody's cited their large cash balances and their reduced cost structures. However, both firms are likely to see their cash come under pressure over the coming year, with carriers likely to continue cutting their spending at least through next year.

© Computerwire

The Power of One Brief: Top reasons to choose HP BladeSystem

More from The Register

next story
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.