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
Fitch said that the company could be downgraded further
if it didn't improve financially over the next 18 months, and that it is not convinced Nokia could stablilise its revenue and achieve positive margins in this period.
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.