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Fitch Ratings downgrades Nokia shares to junk status

updated 06:30 am EDT, Tue April 24, 2012

Nokia shares downgraded to junk status

Nokia has suffered a symbolic blow with Fitch Ratings downgrading the Finnish mobile device maker's shares to junk status, reports Reuters. The revised rating, down from BB+ to BBB-, was assigned on the grounds that the company appears unable to reverse its downward slide. Fitch also suggested that it might downgrade Nokia's shares further if it does not start to show signs of a recovery soon.

'Given the potential headwinds facing the company, Fitch is currently not convinced that Nokia can attain this over the course of 18 months," reads a statement from the ratings agency.

In response, Nokia released a statement to the market reiterating sentiments from its dire first quarter results conference call last week.

'Nokia will continue to increase its focus on lowering the company's cost structure, improving cash flow and maintaining a strong financial position,' said Nokia CFO Timo Ihamuotila.

Nokia, once the dominant player in the smartphone segment, has been hemorrhaging market share to both Apple's iPhone and smartphones running the Android OS. According to Sanford Bernstein analyst Mark Newman, Nokia will also lose its position as the world's largest handset maker over the course of 2012, with Samsung taking its lead. Samsung, said Newman, has benefitted from the strong demand for both its high-end Galaxy line of smartphones, but also its preparedness to sell cheap phones catering for all budgets.

Nokia's results for the first quarter showed the company made a $775 million loss. Perhaps, more disconcertingly, its big gamble on Windows Phone 7 has yet to show any significant return. The precipitous plunge in sales of its now defunct Symbian OS-powered smartphones has continued to dramatically outpace any gains in its Windows Phone 7 device sales.




By Electronista Staff
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Comments

  1. Hash

    Mac Elite

    Joined: Apr 2001

    +6

    Congrats to Elop

    Elop has successfully accomplished his mission to destroy Nokia as every other company he destroyed too, for Microsoft.

  1. Foe Hammer

    Fresh-Faced Recruit

    Joined: Feb 2005

    +5

    So Does That Make ...

    ...Eflop a success or a failure?

  1. Flying Meat

    Dedicated MacNNer

    Joined: Jan 2007

    +3

    Does Microsoft gobble them up

    and push hard with the Windows phone, or do they let 'em crash, thereby sealing Windows phone's fate?

  1. Makosuke

    Forum Regular

    Joined: Aug 2001

    +3

    MS

    Assuming the trend continues and Nokia eventually reaches bankruptcy status, I don't know if MS has any choice but to buy them. There's no other credible manufacturer of Windows phones, so unless Samsung starts pushing the platform hard, MS needs Nokia's manufacturing (and they do make nice handsets) to keep WinPhone at all viable.

    After all, you can't bribe your way into the pockets of consumers if nobody is making your phones.

  1. SockRolid

    Forum Regular

    Joined: Jan 2010

    +4

    Down the staircase

    Re: "...its big gamble on Windows Phone 7 has yet to show any significant return."

    Verizon will be making a huge marketing push on behalf of Nokia and Windows Phone. They are "hoping to do the same thing" for Nokia and Microsoft that they did for Android. And they will fail.

    Why will they fail? First, Android did well for years at Verizon only because Verizon didn't offer iPhone. iPhone now dominates smartphone sales at Verizon, outselling all Android phones combined. Nokia / Microsoft don't have that open field to play in. Which leads to...

    Second, iPhone and Android phones are already firmly established at Verizon. Consumers don't need anything more. iPhone and Android phones cover all the price points, when you include the 1 and 2 year old iPhone models. And they're solid values. Which leads to...

    Third, the Lumia 900 simply isn't as good as iPhone or even the latest Samsung Android phone. And the branding doesn't help either, which brings us to...

    Fourth, the very name "Windows" is a major cringe factor in the consumer market. As in "Yuck. I hate Windows. I had to take a two-week training course at work so I could use Office"

    So yeah, good luck with the dumb phone business, Nokia. You're going to need to milk that market for all it's worth. While it lasts. Because sooner or later, all phones will be smartphones.

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