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 4:16:20 PM
I don't really know what sales numbers need to be for it to be considered a success. I don't think anyone (including Nokia and MS) expect to put up iPhone sized numbers out of the gate. There is too much competition, and too many people already in the android an iOS camps now. However, it doesn't need to move 5 million units to consider it a success and know they are going in the right direction.
The only reason Elop would get the boot is if the shareholders actually thought going Android was a better route that going WP7. I don't think anyone thinks that right now, and waiting for the outcome of the Oracle/Google trial, it might turn out really bad for anyone who DID choose android and went all in.
"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer
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