Fitch cuts Nokia to junk, outlook negative

Apr 24, 2012 09:16 AM EDT

Share This Story

  • Print
  • Email

Fitch Ratings downgraded its credit rating on Nokia Oyj to junk status and said the outlook remained negative, as the Finnish handset maker's dwindling market share starts to strain its cash position.

Follow us

Shares in Nokia, which were hit badly this month by a profit warning, fell 2 percent to a new 15-year low of 2.654 euros after the downgrade on Tuesday.

Fitch cut its rating on Nokia - already downgraded in recent weeks by Standard & Poor's and Moody's - to BB+ from BBB- and said this could be lowered further unless the company's business showed improvements over the second half of 2012 and in 2013.

"Given the potential headwinds facing the company, Fitch is currently not convinced that Nokia can attain this over the course of 18 months," it said in a statement.

Nokia defended its financial position in a separate statement, citing its net cash position of 4.9 billion euros ($6.4 billion) as of end-March.

"Nokia will continue to increase its focus on lowering the company's cost structure, improving cash flow and maintaining a strong financial position," Chief Financial Officer Timo Ihamuotila said.

Fitch, however, said Nokia's cash could be depleted over the next 18 months by substantial restructuring charges and potentially negative operating cash flow.

Nokia - which has issued two eurobonds worth in total 1.75 billion euros and two dollar bonds worth $1.5 billion in total - has struggled in recent years to keep up with Apple Inc and Google Inc in the smartphone business.

Its Chief Executive Stephen Elop bet last year the firm on the new range of Lumia smartphones, which are using Microsoft Corp software, but sales have so far been slow.

Last week Nokia reported a steep loss for the first quarter, dropped its sales chief and promised to slash more costs.

"The launch of the new Lumia phone with AT&T, and the potential launch of new Nokia products later in the year, could be positive for Nokia's credit profile," Fitch said, adding the company would need to show growth and profit to avoid further downgrades.

Moody's cut Nokia's rating to just one notch above junk earlier this month, while Standard & Poor's made a similar downgrade last month.

Some analysts have said Nokia shares look massively undervalued, considering its cash position and large patent portfolio. But they also caution against investing before signs of a recovery in sales.

(Editing by Ritsuko Ando and David Holmes)

Get the Most Popular Mobile&Apps Stories in a Weekly Newsletter

Copyright 2013 Thomson Reuters. All rights reserved.

Featured Video : Intel Pocket Avatars

Join Our Conversation

Smartphones
LG G Watch RLG G Watch R pricing revealed, definitely not cheap
Samsung Galaxy Note 4 leaks in new images – Is this the real deal?
Apple now offering iPhone upgrades with AT&T Next through online store, $0 down
Apple to unveil iWatch alongside iPhone 6 on Sept. 9?
Tablet / Laptop / PC
Dell Venue 7 and Venue 8Dell unveils Venue 7 and Venue 8 Android 4.3 Jelly Bean tablets
Retina iPad Mini facing delays, may not launch until early next year
Refurbished 128GB iPad with Retina Display now available on the Apple Online Store
Samsung Galaxy Note 10.1 – 2014 Edition: Pricing and availability now official
Gadgets
Amazon LogoAmazon reportedly to launch ‘Firetube’ set-top box before 2013 holidays
Samsung Galaxy Note 3 and Galaxy Gear India launch: Pricing and availability
Samsung Galaxy Gear Android smartwatch now up for pre-order in Canada
Samsung Galaxy Gear 2 reportedly in the works already, may debut at CES or MWC 2014
OS / Software
HTC LogoHTC reportedly considering Android/Windows Phone dual-booting smartphone as Microsoft pushes for deeper Windows mobile integration
iOS 7 Chrome Incognito mode leaks private searches due to bug
Sprint HTC One Android 4.3 Jelly Bean already rolling out, AT&T, T-Mobile & Verizon to follow
Microsoft Windows 8.1 now available for pre-order
Internet / Social Media
Google DowntimeGoogle blacks out for two minutes, causes 40 percent drop in world’s Internet traffic
Xbox Music web player is live and ready for Xbox Music Pass subscribers
Facebook Android app collected phone numbers even if users never logged in
Firefox 22 brings support for web video calls, 3D gaming, and Unreal Engine 3
What's App
Vine update brings new camera experienceVine gets major update, lets you upload previously-shot videos & more (VIDEO)
BlackBerry Messenger (BBM) finally hits Windows Phone – Available as a free download now
Instagram releases Bolt ephemeral messaging app in select markets to challenge Snapchat
PayPal for iOS update brings loyalty card support, other features and enhancements
Copyright © 2014 Mobile & Apps All rights reserved. mobilenapps
Real Time Analytics