Feeds

Moody's downgrades Nokia to near-junk status

Finns failing at high and low end of market

Intelligent flash storage arrays

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. ®

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
'Cowardly, venomous trolls' threatened with TWO-YEAR sentences for menacing posts
UK government: 'Taking a stand against a baying cyber-mob'
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Arab States make play for greater government control of the internet
Nerds told to get lost in last-minute power grab bid at UN meeting
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
Zippy one-liners, broken promises: Doctor Who on the Orient Express
Series finally hits stride, but Clara's U-turn is baffling
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.