SALON

Friday, Apr 27, 2012 4:15 PM UTC

Nokia downgraded by S&P after Samsung pushes past

By

Topics: From the Wires,

HELSINKI (AP) — Standard and Poor’s on Friday downgraded Nokia’s credit rating by one notch and warned that it may reduce it again unless the company’s performance improves.

The rating agency said it was lowering the Finnish company’s long-term corporate credit rating to BB+ from BBB- and its short-term corporate credit rating to B from A-3.

The downgrade came after Nokia Corp. posted huge first-quarter losses and a 30 percent drop in sales and a report earlier Friday estimated Samsung Electronics Co. had overtaken it as the world’s largest maker of mobile phones.

“We now expect Nokia to report significantly lower margins and cash flows in 2012 than we had previously expected,” S&P said. “The outlook is negative, reflecting the possibility of a further downgrade if Nokia fails to stabilize revenues and margins and significantly cut its cash losses.”

Nokia CFO Timo Ihamuotila said the company was in transition, a year after it teamed up with Microsoft Corp. to incorporate Windows software in its new handsets.

“Nokia is in the middle of a transformation program which encompasses every aspect of our business,” Ihamuotila said, adding that the company was “implementing a decisive action plan” to improve growth.

“The main focus of these actions is on lowering the company’s costs, improving cash flow and maintaining a strong financial position, while bringing attractive new products to market,” he said, but gave no details.

Nokia’s share price closed down slightly at €2.74 ($3.62) in Helsinki.

Last week, Nokia announced one of its worst quarterly results ever, blaming tough competition for a €929 million ($1.2 billion) net loss as sales plunged, especially in the smartphone market. It said it expects no improvement in the second quarter.

The cell phone maker is fighting fierce competition in the top-end from Apple Inc.’s iPhone and other makers using Google Inc.’s popular Android software, including Samsung and HTC of Taiwan. It is also being squeezed in the low-end by Asian manufacturers making cheaper phones, such as China’s ZTE.

Boston-based Strategy Analytics said Friday that Samsung surpassed Nokia as the world’s largest seller of cell phones by volume, grabbing a 25 percent global market share against Nokia’s 22 percent.

The agency’s report also said that Samsung had overtaken Apple as the largest maker of smartphones selling 44.5 million units against Apple’s 35 million. Nokia dropped to third place with under 12 million sold in the quarter, Strategy Analytics said.

Fitch ratings agency recently downgraded Nokia to junk status, while Moody’s has cut it to near junk status.

_____

Online:

www.nokia.com

More Matti Huuhtanen.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
    Credit: AP/LM Otero

  • Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
    Credit: AP/Matt Rourke

  • A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
    Credit: AP/Jenny Aicher

  • Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
    Credit: AP/Molly Riley

  • Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
    Credit: AP/J. Scott Applewhite

  • Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
    Credit: AP/Carolyn Kaster

  • O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
    Credit: AP/Las Vegas Review-Journal/Jeff Scheid

  • Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
    Credit: AP/NASA/Chris Hadfield

  • When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
    Credit: AP/Jacquelyn Martin

  • A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
    Credit: AP/The Duluth News-Tribune/Clint Austin

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments are not enabled for this story.

follow salon

Most Read

Popular on Reddit

links from salon.com

From Around the Web

Presented by Scribol
listener_new_rect The Listener: So long, Sookie Stackhouse

Recommendations