Nokia credit rating cut to junk status

Credit rating company Fitch Rating has downgraded Nokia from BB- to BBB+, marking the company as unfit for investment.

Fitch Rating has downgraded Nokia from BB- to BBB+, marking the company as unfit for investment. Image credit: Nokia

Timo Ihamuotila, Nokia's Executive Vice President and CFO, said in a statement on Tuesday: "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's financial position remains strong, the statement continued, saying that of 31 March, 2012, Nokia had gross cash balances of €9.8bn (£7.9bn), and a net cash position of €44.9bn.

Another credit rating agency, Moody's, reaffirmed Nokia's investment-grade credit rating on 16 April, although it downgraded Nokia's long-term credit rating to Baa3 and maintained a negative outlook on the rating. Moody's said that its investment grade rating is backed by Nokia's strong liquidity position and capital structure.

On 19 April, Nokia reported a €1.34bn operating loss for its handset division this quarter, saying that margins would not improve immediately and could worsen as sales of its Lumia Microsoft-based handsets had not been as good as hoped.

It currently has around 10 percent of the global handset market, but only one percent of the US smartphone market.