First Moody’s and now Fitch Ratings downgraded its credit rating on Nokia to “junk” status and said that the outlook remained negative, as the Finnish handset maker’s dwindling market share starts to strain its cash position. Fitch cut its rating on Nokia 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.
“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.
“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. The company said in a statement: “We are quickly taking action to position Nokia for future growth and success. Nokia will continue to increase its focus on lowering the company’s cost structure, improving cash flow and maintaining a strong financial position.”
Nokia recently posted its Q1 2012 financial reports, noting an operating loss of €1.3 billion that led to a net loss of €590 million for the period. Even the company earlier warned that it would not be able to maintain its earlier forecast resulting into huge damage. Nokia sold 11.9 million smart devices during Q1, which is less than half of the 24.9 million it achieved in the first three months of 2011. Operating losses from the Smart Devices and Services division alone amounted to €219 million, equivalent to a -5.2 percent operating margin.