Nokia Credit Rating Cut to "Junk" Status by Fitch
April 24, 2012 11:44 AM
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Nokia credit rating downgraded by a third firm
You certainly don't have to be an analyst to understand that Nokia is sailing through rough waters. The mobile phone company is still one of the largest phone shippers in the world, but devices it ships tend to be low-profit mainstream handsets rather than high-end and profitable smartphones.
Nokia has recently had some success with its
, but that modest win isn't enough to turn around its fortunes.
This week, Fitch Ratings downgraded Nokia's credit rating to junk status. Fitch also said that the outlook for Nokia remained negative as market share continues to shrink. Fitch isn't the first to downgrade Nokia's credit rating either; the phone company has been downgraded by Standard & Poor's and Moody's as well. Nokia's ratings could be lowered even further if the company doesn't improve in Q2 2012 and beyond.
"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.
reports that Nokia issued a statement showing its cash position at $6.4 billion as of the end of March. Apparently, that was an attempt to show investors and analysts that the company is sitting on a cash stockpile despite poor market share.
"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 believes that that cash reserve Nokia has right now could be completely depleted over the next 18 months thanks restructuring charges and negative cash flow. Nokia is taking a battering in the smartphone market because it has been unable to compete with high-end offerings from Apple and the hoards of Android smartphones available.
Nokia has hopes of turning around with this new smartphones such as the Lumia 900 on AT&T and other new devices coming this year.
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RE: Convince dump, buy, then pump.
4/24/2012 12:49:26 PM
I am no apple fan, but 4th quarter is always the biggest due to the holiday season, so it is better to look at how many iPhones were activated 1st quarter last year versus this year.
Also remember you got tons and tons of people upgrading to a 4s from a 4 or 3gs, and giving those older iPhones to friends and family (or selling them on craigs list/ebay) because they are still perfectly fine for most uses. Those don't count into apple sales, even if now those people will become iPhone users for the long haul.
I really like the 900, but I don't think it is a "killer" handset. I think perhaps when WP8 devices ship, I will make the move.
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