updated 10:05 am EDT, Mon April 16, 2012
Moody's down on Nokia prospects
Moody's on Monday downgraded Nokia's debt rating a level from Baa2 to Baa3. The credit rating giant based its decision on Nokia's lowered outlook and saw it as a reflection of longer-term, more systemic issues. The company was being pinched both at the low end, by a wave of very cheap phones and Chinese discounts, and at the high end by a "more challenging" transition where Symbian was falling faster than Windows Phone could replace it.
The credit firm was still optimistic that Nokia's aggressive pricing and marketing push would make Windows Phone the real third major mobile OS contender next to Android and iOS. However, the increasing dependence on the OS was reducing the sources of revenue Nokia could tap for growth, putting it at a greater risk.
The Finnish company might have to help bail out its related mobile networking venture, Nokia Siemens Networks, Moody's added.
Nokia in a response largely clung to the financial upside of the Moody's report, noting that its "financial position remains strong" as it keeps a good financial liquidity and foundation for capital. The company is focused on preserving as much cash as it can during the Windows Phone transition, which has included job cuts and reorganizing.
To improve its rating, Nokia needed to show that phones like the Lumia 900 could get "substantial" market share. Early signs have been positive, with early US sellouts, but the relatively modest initial supply and the brief inventory swap as a result of the missing data glitch have raised questions about Nokia's prospects.