LRCM true lion today.(COMTEX)B: S&P Downgrades Sun Microsystems to Junk ( AP Online )
B: S&P Downgrades Sun Microsystems to Junk ( AP Online )
Mar 05, 2004 (AP Online via COMTEX) -- NEW YORK (Dow Jones) - Standard & Poor's
cut its credit rating on Sun Microsystems Inc. two notches to double-B-plus, the
top speculative, or junk, rating, affecting about $1.3 billion of public debt.
The computer company hasn't "had investment-grade predictability and
profitability in two-plus years," said S&P analyst Martha Toll-Reed. Management
"has been slow to adapt to market changes since the downturn," when the tech
bubble burst in the spring of 2000.
May Petry, a spokeswoman at Santa Clara, Calif.-based Sun Micro, said the
company has a "strong financial foundation of $5.16 billion in cash and
marketable securities, which is over three times our outstanding debt." She said
the company's cash position, coupled with its products and customers, makes Sun
Micro "well-positioned to achieve its goals."
Toll-Reed didn't dispute its financial profile, but said the rating is more a
reflection of their business risk.
"The cash gives them flexibility without question," she said. "They have good
technology and a good product line-up. But they have a relatively narrow revenue
base, and market growth is in segments that are not to their historical
strength," she said.
S&P's outlook on Sun's rating is stable.
Fitch Ratings last month downgraded Sun Micro's senior unsecured debt one notch
to triple-B-minus, its lowest investment grade rating.
Last September, Moody's Investors Service dropped the company to Baa3, its
lowest investment-grade rating, with a negative outlook - indicating a downgrade
is likely within one and a half to two years. Sun Micro "is a work in progress
with a lot of new product initiatives, and the question is how customers will
respond," said Moody's senior analyst Paul Hsi. "Can Sun regain market share?"
Shares of Sun Micro finished Friday at $4.80, down 36 cents, or 7 percent, on
heavy volume on the Nasdaq Stock Market.
Copyright 2004 Associated Press, All rights reserved
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APO Priority=r
APO Category=1310
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(CO:Sun Microsystems Inc; TS:SUNW; IG:CPR;)
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SUBJECT CODE: 1310
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