S&P Downgrades Nokia. Again.
The market’s loss of faith in Nokia grows more profound by the day. Standard & Poor’s on Wednesday morning cut its long-term debt rating on the company to BB- from BB+ and reiterated its already negative outlook. Driving the ratings agency’s decision: Nokia’s worse than expected second quarter earnings and third quarter guidance.
“We now assume that Nokia’s smartphone operations will post lower revenues than we previously anticipated over the coming quarters,” S&P explained. “We also believe that consolidated revenues for 2012 will show a decline of 16 percent to 19 percent and that the company will post a non-IFRS operating loss before restructuring costs.”
Clearly, S&P is not at all convinced that Nokia’s turnaround is a sure thing.
Unfortunate news for Nokia, which has been taking a beating from the ratings agencies recently. Last month, Moody’s Investors Service and Fitch Ratings both downgraded it for reasons similar to those cited by S&P.
Yet the unprofitable handset maker continues to valiantly struggle on. It has restructured to cut its cash losses, and it’s gearing up to launch some new Lumia smartphones based on Microsoft’s forthcoming Windows Phone 8 operating system sometime next month. That could help it regain its footing in the market, something even S&P acknowledges. “We expect Nokia to launch new models, notably those based on the Windows Phone 8 operating system, but we think it could take some time before this can help stabilize revenues,” S&P said.