"Opinions"
1. The denial was a joke: they had $4.4 B in cash and $4.1 B in commercial paper at 3/31/2001. First that's only a cushion of $300 m. Details such as maturities could wipe that out, and they need more than zero cash just to operate. If the maturities are 1 year at 6%, that could be up to $246 m in cash interest due. I assume the maturities are shorter, maybe 90-91 days, or even less (they probably staggered maturities). Then how about payables, which were just under 60 days last I checked. They stretch payables, and speed collections and still had the small cushion at 3/31.
2. All this is after borrowing $1 B last November.
3. The next part of the release stated that: Through April 6, 2001, Motorola said it had more than $4.5 billion in cash and cash equivalents. Outstanding commercial paper had been reduced to $3.1 billion helped by the sale of assets and a term loan. So cash improved $100 m, and some maturing commercial paper was paid -- by drawing on part of their recently announced $2 B bank line (maturing November 2001, collateralized by, and expected to be repaid from proceeds of certain wireless assets expected to sell for $2B). So, that is a non-response to the market anxiety about liquidity. A truthful response would compare (1) cash and equivalents to the sum of (2a) commercial paper and (2b) bank debt maturing in less than 1 year.
4. I would not be surprised if the $2B sale were delayed or the amount changed.
5. Note the release says "Any suggestion or erroneous report that Motorola faces a serious liquidity problem is simply not correct and is not supported by fact."
My response is "Any suggestion or accurate report that Motorola faces a serious liquidity problem is simply not incorrect and is supported by fact."
5 duh. Any erroneous report {that blah blah blah} is simply not correct and is not supported by fact. I assume the in-house counsel signed off on the release.
A rating downgrade could come the day after their next earnings release, and conference call the next morning, and I would not cover any shorts. Use any rally (like Thursday's ridiculous bounce) to add to short positions or similar options positions.
6 (extra discredit) Iridium
IMO. |
