Nokia Bond Ratings Plummet Further Into Junk Territory
Moody’s on Monday cut its ratings on Nokia’s debt — already in junk bond territory — by another two notches.
The move follows another tough quarterly earnings report from the Finnish smartphone maker.
“Today’s rating action reflects our view that Nokia’s transition in the smartphone business will cause deeper operating losses and consequently cash consumption in the coming quarters than we had previously assumed,” Moody’s analyst Wolfgang Draack said in a statement. “A return to profitability in the Devices & Services (D&S) segment on the back of smartphones with the Windows Phone 8 mobile operating systems is by no means assured.”
The move follows a similar hit last week from ratings agency Fitch.
Nokia said it was disappointed by Moody’s action, but said it shouldn’t have a big impact on its operations. The company noted that it has a net cash balance of more than four billion euros, and access to an additional 1.5 billion euros via its credit line.
“We are quickly taking action to position Nokia for future growth and success,” Nokia CFO Timo Ihamuotila said in a statement. “Nokia will continue to focus on lowering the company’s cost structure rapidly, improving cash flow and maintaining a strong financial position.”