SAN FRANCISCO—Fitch Ratings has lowered credit ratings on Freescale Semiconductor Inc., saying it expects Freescale's free cash flow will be negative for the fourth quarter and all of 2009.
Fitch lowered Freescale's issuer default rating to "B" from "B+" and also lowered several other credit ratings.
Fitch (New York), a ratings agency for the world's financial markets, cited weakened consumer spending prospects, sharper-than-anticipated production cuts by Freescale's automotive customers, and a decline in Freescale's quarterly cellular segment sales to below $100 million beginning in the current quarter.
Fitch said its actions affect approximately $10.1 billion of total debt including the assumption of a fully drawn revolving credit facility.
The ratings also reflect Fitch's expectations that Freescale's credit protection measures will weaken over the near term, driven by a combination of lower profitability anticipated for 2009 and the company's recent draw down on its revolving credit facility, Fitch said.
Freescale (Austin, Texas) announced Oct. 24 that it received about $460 million through making a draw on a revolving credit facility under its credit agreement, which expires in 2012.
Despite challenges facing Freescale, Fitch said the company has sufficient liquidity to absorb greater-than-anticipated cash usage over the next two years. As of the quarter ended Sept. 30, Freescale's liquidity was supported by approximately $1.8 billion of cash and cash equivalents and approximately $230 million of availability remaining on the revolving credit facility, Fitch said.
Fitch said further negative ratings could occur if Freescale's free cash flow burn is greater than expected of the company delays the sale of or exit from its cellular business or fails to replace lost revenues from it over the intermediate term.
Fitch said it may stabilize the ratings if Freescale eaningfully reduces debt with cash proceeds from the sale of the cellular business or experiences greater-than-anticipated operating margin expansion or revenue growth.
Freescale said Oct. 2 it would exit the wireless handset chip set business, likely through the sale of the unit. On Oct. 30, Freescale announced it would trim about 10 percent of its workforce after charges dragged the company to a $3.37 billion loss in the third quarter.
RSS
Digital
10 emerging technologies to watch:
EE Times has compiled a list of emerging technologies that we think will be worth watching out for in 2010. Biofeedback or thought-control of electronics are among the contenders.
Hot applications in 2010:
We've compiled a list of 10 technology applications you should watch for in 2010, ranging from e-book readers to 3-D TVs. We examine the features that make these apps so compelling as well unresolved issues.
Top 25 predictions for semis in 2010:
2010 is just beginning to unfold in the electronics industry. Looking into our crystal ball, we have released our own chip forecasts--and other predictions--for 2010.
Seven things to fix in 2010:
The editors of EE Times came up with their own informal list of things we hope engineers fix in 2010, spanning everything from nano-lithography to space travel. What do you want to see get done this year?
'09 moves that are shaping the future:
This was a brutal year, but the industry gets a nod for showing grace under fire. Here's our Top 10 guide to the coming year, illustrating what to expect in 2010.
10 CEOs out in 2009:
It's been a tough year for the global electronics industry and CEOs. We survey the dismissal of 10 industry CEOs during the first three quarters of 2009 and what's ahead for the rest of the year.
Notable women in microelectronics:
There is no better time than a global economic recession to examine the keys to successful corporate governance. So, EE Times has compiled an international list that celebrates women who are business and technology leaders in semis.
EE Times updates Silicon 60:
Seventeen companies have been added to the lastest version of our Silicon 60 list of emerging startups. Forty-three companies survived as emerging companies that are still worth watching.
RSS| 
Digital| 
Mobile
