STOR looks decent man...but looking to far down the road is painful these days, IMO. Look at the fools who pumped many of these stocks saying it was the next INTC, SUNW or whatever the last few years??
Check out the MOT news....yikes...It could be the next XRX or LU...wait it already is...LOLOLOL!!!
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UPDATE 3-Motorola says Turkey's Telsim missed payment
(Adds Motorola, money manager comments throughout)
By Ben Klayman and Yukari Iwatani
CHICAGO, May 14 (Reuters) - Motorola Inc. (NYSE:MOT), the No. 2 maker of cell phones, said on Monday that Turkey's No. 2 wireless carrier, Telsim, missed an April 30 deadline to pay a $728 million loan payment Motorola made to the company.
Telsim, which owes Motorola about $2 billion in total, has 30 business days until it is in default on the $728 million, Motorola said in a more detailed quarterly filing with the Securities and Exchange Commission.
"Motorola is currently in discussions with Telsim to reschedule payments, including the April 30 payment, under the Telsim loan," Motorola said in the filing.
In order to boost sales in the past few years, Motorola and other technology giants, including Cisco Systems Inc. (NASDAQ:CSCO) and Lucent Technologies Inc. (NYSE:LU) , have loaned money to customers, in an approach called vendor financing. Motorola and others have loaned their customers the money to buy their products, a practice that has backfired recently as business slowed and many smaller customers defaulted on payments.
Wit Soundview analyst Matt Hoffman said the $728 million figure suggests Telsim accounts for 10 percent of Motorola's global telecom solutions business, which he finds worrisome.
"That's surprisingly large," he said. "We had anticipated somewhere around 7 (percent) or 8 percent. This is a large portion of their GSM business in the Europe, Middle East, Africa region."
The loan is backed by 66 percent of Telsim's stock, Motorola said. However, Hoffman said that given the Turkish economy's weakness, it would make sense for Motorola to reschedule the payments and be repaid over time.
Motorola officials pointed to the talks to reschedule the payments and added they remain confident in Telsim's value.
"The Turkish economy has gone through a downturn and the currency has undergone a large devaluation," company spokeswoman Jennifer Weyrauch said. "We believe this situation will turn around and the intrinsic value of Telsim will benefit."
Motorola disclosed as of March 31 about $2 billion of the $2.9 billion in gross long-term finance receivables is related to Telsim. Telsim owed Motorola $1.7 billion at the end of last year, but accrued interest and additional money owed which added to the total.
"That's clearly worrisome especially in light of the ongoing credit review that the (credit rating) agencies are putting them through," said Walter Casey, fund manager of Bank One Investment Advisor's technology fund.
"They need to spell out to investors more precisely how they plan on meeting their cash flow objectives," he added. "I think they're going to sell portions of the business.
Motorola previously said it is evaluating its operations and may sell units within its five main businesses.
Last month, Motorola reported a $206 million first-quarter loss, its first operating loss in 15 years. The company also warned investors of a wider second-quarter loss.
In early April, Motorola, which ranks behind only Finland's Nokia (NOK1V)(NYSE:NOK) in cell-phone production, denied reports it was facing serious liquidity problems after its shares sank to their lowest level in eight years.
"Motorola today is financially sound. Any suggestion or erroneous report that Motorola faces a serious liquidity problem is simply not correct and is not supported by fact," Motorola President Bob Growney said at the time.
Analysts have said investors feared Motorola might follow in the footsteps of Lucent, which has reported negative cash flow due to operational missteps.
Motorola is already under credit watch by credit rating agencies Moody's and Standard & Poor's, considered a precursor to a rating downgrade.
In April, the company said it had $4.4 billion in cash and cash equivalents compared with $4.1 billion of outstanding commercial paper at the end of the first quarter this year, countering the assertion that it has a liquidity problem.
Its commercial paper debt was cut to $3.1 billion through April 6 by the sale of assets and a term loan, Motorola said.
Motorola's vendor financing problems are being repeated across the telecom equipment sector, one money manager said.
"This has been a major issue for the last nine months and has contributed to the fall in technology stocks in all the telecom equipment providers," said Tim Ghriskey, senior portfolio manager with mutual fund company Dreyfus Corp.
In New York Stock Exchange trading on Monday, Motorola shares closed off 26 cents, or more than 1 percent, at $15.74. Over the past year, it has underperformed the Standard & Poor's 500 index by about 43 percent. |
