PowerPC-chip maker Motorola has denied that it is facing financial problems.
The company will announce its first-quarter financial results tomorrow and does so against a background of falling mobile-phone and semiconductor sales, sparked by a slow-down in the US economy. According to a Bloomberg report, analysts are concerned that the company does not have the financial strength to obtain short-term debt financing.
"Motorola is financially sound," Bob Growney, Motorola president and chief operating officer, said in a statement. "Any suggestion or erroneous report that Motorola faces a serious liquidity problem is simply incorrect and is unsupported by fact."
The Motorola statement was released towards the close of regular Friday market trading.
Shares dive Motorola's shares fell below its 52-week low, ending the regular trading at $11.50, a drop of 23.08 per cent.
The company insists it has more than $4.5 billion in cash and cash equivalents.
"To boost its ability to borrow, Motorola must reduce capital spending, sell off some of its business units or bring in more revenue," says Samuel May, of US-based research analysts, Bancorp Piper Jaffray.
"Investors have reason to be cautious about any large capitalization company that is seeing its business deteriorate," May said.
With revenue continuing to diminish, Motorola has pursued other options to add to its cash position.
Since December, it has laid off more than 22,000 employees, accrued over $1 billion from the sale of interests in mobile-phone network operating companies worldwide, and expects to receive about $1.8 billion for the sale of its interests in cellular operating companies in northern Mexico by the third quarter of this year.