Feeds

Moody's downgrades Nokia to near-junk status

Finns failing at high and low end of market

Business security measures using SSL

Ratings agency Moody's has lowered its debt rating for Nokia to near junk status, and warned that the company is facing even tougher times ahead.

In a note to investors today Moody's cut the world's largest mobile handset manufacturer's rating from Baa2 to Baa3, its lowest rating for investment grade stock.

While the trigger for the downgrade was last week's less-than-inspiring financial results, Moody's warns that Nokia faces a rough road ahead in its smartphone business and further downgrades are possible.

"Nokia's transition in its Smart Devices from Symbian-based phones to the Windows-based Lumia devices is proving more challenging than expected given that sales of Symbian-based devices are falling off very quickly while Lumia sales are only ramping up slowly," the note reads. "Nokia's current Baa3 rating reflects Moody's expectation that Lumia devices will be accepted in the market in 2012 with the help of price and marketing support and that it will become the third smartphone system next to Google's Android and Apple's iOS."

No doubt Nokia's management, and Microsoft's for that matter, are hoping that Windows Phone will be a massive hit and grow to rival Android and iOS, but there's a huge way to go. In the meantime Nokia's low-end phone business is being rapidly eroded by cheap Chinese competition Moody's notes, while the agency predicts more money will be needed to support joint venture Nokia Siemens Networks next year.

It's not all doom and gloom for the Finns however. Moody's notes that Nokia has reserves of around €10bn, roughly double its debt, and the company now has the Lumia line well in hand, even if it is having to give some away free.

Moody's said it would upgrade Nokia again if it showed evidence of increasing margins or got a lot of support from buyers for the Lumia range. However, a further downgrade is promised if things continue to get worse.

You could argue that Moody's was one of the ratings agencies that consistently passed off sub-prime debt as investment grade material in the noughties and that it may well be wrong – indeed, Nokia's share price rose slightly on Monday. But more than a few analysts are now seriously concerned about Nokia's future, with the company losing both staff and customers, and in an alliance with Microsoft to push an unpopular mobile operating system. ®

Reducing the cost and complexity of web vulnerability management

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
JINGS! Microsoft Bing called Scots indyref RIGHT!
Redmond sporran metrics get one in the ten ring
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Murdoch to Europe: Inflict MORE PAIN on Google, please
'Platform for piracy' must be punished, or it'll kill us in FIVE YEARS
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
Show us your Five-Eyes SECRETS says Privacy International
Refusal to disclose GCHQ canteen menus and prices triggers Euro Human Rights Court action
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
Protecting users from Firesheep and other Sidejacking attacks with SSL
Discussing the vulnerabilities inherent in Wi-Fi networks, and how using TLS/SSL for your entire site will assure security.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.