Fitch drops Nokia's credit to junk status; Nokia responds

The financial issues at Nokia have caused one of the the major ratings companies to downgrade the smartphone maker severely. Reuters reports that today, Fitch Ratings changed its credit rating of Nokia down to "junk" status. In its statement, Fitch say that Nokia was still having serious financial issues, even though Nokia claims it will improve, adding, "Given the potential headwinds facing the company, Fitch is currently not convinced that Nokia can attain this over the course of 18 months."

Nokia's stock price went down 2 percent on the news of the credit rating downturn. In response, Nokia sent out a press release with this statement:

We are quickly taking action to position Nokia for future growth and success. Nokia will continue to increase its focus on lowering the company's cost structure, improving cash flow and maintaining a strong financial position.

Nokia added that in terms of its finances it "remains strong" with a net cash amount of 4.9 billion euros. However, Fitch believes that Nokia's cash could be drained over the next 18 months unless things improve.

Last week, Nokia recorded a loss of 929 million euros for the first quarter of 2012. Nokia's CEO Stephen Elop also admitted last week that sales of its Lumia line of Windows Phone-based smartphones "have been mixed" with better sales results in the US compared to the UK. The early sales success of the Lumia 900 in the US could help Nokia. Even Fitch said today, "The launch of the new Lumia phone with AT&T, and the potential launch of new Nokia products later in the year, could be positive for Nokia's credit profile."

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Enron said,
I guess Apple should do the same then. I want an iPhone with Android on it.

Oh wait. That would be a bad business move.

Except that the iPhone sells like hotcakes, unlike WP.

MS Lose32 said,
Except that the iPhone sells like hotcakes, unlike WP.

It seems the Lumia 900 has seen good sales. Maybe WP just needed the right device and promotion.

pwgarner said,

It seems the Lumia 900 has seen good sales. Maybe WP just needed the right device and promotion.


Says AT&T who has a vested interest in it? We've heard this before. It's best to wait for the real numbers before jumping to conclusions. From what I've heard the stock was just low from the beginning.

KomaWeiss said,

Quit trying to troll. You're obviously failing at it.

If anyone is trolling here, it's you. I was pointing out that choosing to go with a particular OS is not a bad business move. If Nokia wants to differentiate itself that way, it makes sense. If they want to be another vanilla Android maker and get lost in the world of a new flagship phone every month, they can do that, and I'm sure they decided against that.

It does not help Nokia when articles such as the old firmware on white phones are plastered all over the Internet, including neowin. But when Nokia explains it not to be true we don't see any retractions, updates, or followups. When sites are manufacturing bad news, it only makes it worse.

nohone said,
It does not help Nokia when articles such as the old firmware on white phones are plastered all over the Internet, including neowin. But when Nokia explains it not to be true we don't see any retractions, updates, or followups. When sites are manufacturing bad news, it only makes it worse.

I don't think people care about the firmware on their phones, unless they have a problem. Those who care should (I hope) already know that firmware is easily updated at home if it was really the case.

I don't think that when iOS5 was released, all the iPhones in all the shops suddenly get iOS5 immediately either (Apple stores might update the phone when you buy it though?)...

Personally I don't give a crap if Nokia goes under. All the Nokia phones I've ever had fell apart in less than a year. Ironically, my Motorola phones lasted far longer!

MS Lose32 said,
Personally I don't give a crap if Nokia goes under. All the Nokia phones I've ever had fell apart in less than a year. Ironically, my Motorola phones lasted far longer!

Well your expericence is the only accurate one? One that counts? One that has credibility?

In the 1990s when selling phones, people would 'ask' for the 'cheaper' Motorola phones, but one of our companies specialized in providing a higher quality Nokia phone for the same cost.

Often users would insist that the 'plastic cover' that was the 'flip' aspect of the motorola phone made it SO much better, but in our testing and the majority of the customers, the motorola phones were crap, although popular from other carriers because they were CHEAP and could save $100 on each activation.

So my experience 'varies' from yours, greatly. Nokia even in the Analog days was a solid phone that had a better design for signal strength.

The Nokia phones in the last couple of years, the same seems to be true, solid phone technology, flawless operation and better 'signal' than most phones, especially an iPhone 4/4s. A Nokia phone even makes ATT's coverage look pretty good.

PS Want to see a 'big' after-market, go look up Motorola replacement touch screens on EBay.

Edited by thenetavenger, Apr 24 2012, 9:58pm :

Not surprised by this at all. Will take a while for Nokia to be profitable again and just selling Windows based phones will not make that happen...at least, not over night. I dont think those "smoked" commercials really did much good that MS/Nokia put out. And hte FB challenges now are pretty much useless since FB for Android got an update that makes posting pics on FB much much easier and faster.

techbeck said,
And hte FB challenges now are pretty much useless since FB for Android got an update that makes posting pics on FB much much easier and faster.

Ya, you realize the challenges were NOT just about posting pictures to FB, in fact that is what WP7 lost doing in the initial challenge.

WP7 is truly faster, no matter if you are pulling open a large App and flipping back to email and back to the App, or any type of getting around usability concept you can think up. That is the point, seriously.

thenetavenger said,

Ya, you realize the challenges were NOT just about posting pictures to FB, in fact that is what WP7 lost doing in the initial challenge.

WP7 is truly faster, no matter if you are pulling open a large App and flipping back to email and back to the App, or any type of getting around usability concept you can think up. That is the point, seriously.

Only "faster" since Windows Phone experts are going up against novices. And some of the challenges, the WP was already setup to beat the challenge (like the weather tests). Also, WP has not won every single challenge and these challenges also fails to release the videos on who beat WP (unless I missed them).

So is WP faster? In some cases, but not in all. But I dont think these challenges are a good gauge on performance and are all that accurate. Plus, its not really helping them ATM.

I would rather see the apps/games/all the things you can do with WP that stupid "I can upload a pic faster to FB than you" comparisons.

Not sure if serious.
(It's a Reuters article written about a European company. W in the F would they use US currency??)

BumbleBritches57 said,
Why the **** are they using Euros? I don't know the conversion rate and honsetly, I don't give a ****. use American dollars you dip****s.

Is there law that they should use dollars? Nokia is Finnish company, euros are standard currency there. You fail...

Weird, you would think that one of the few companies in the world that has one of the richer companies in the world 'full support' would get a good credit rating.

I guess if Microsoft is financially floating a company, its credit rating goes to crap? Strange, this didn't happen to Facebook a few years ago when it needed money from Microsoft, nor did it happen to Apple either time it needed money from Microsoft. (And Apple in 1997 was in far worse shape than Nokia is today.)

thenetavenger said,
Weird, you would think that one of the few companies in the world that has one of the richer companies in the world 'full support' would get a good credit rating.
I guess if Microsoft is financially floating a company, its credit rating goes to crap? Strange, this didn't happen to Facebook a few years ago when it needed money from Microsoft, nor did it happen to Apple either time it needed money from Microsoft. (And Apple in 1997 was in far worse shape than Nokia is today.)


dear netavenger, you remind me a certain claim, made by an apple fan of course, who said:"microsoft didn't save apple, apple didn't really needed MS money, she had a fortune of 1.5 billion $, so, the 150M $ MS invested, had little help."

my only regret is that MS cashed out to soon.(sold the shares in 2003 2004)

with respect.

p.s
it's a pleasure to read your comments.

at this point in time I think we are looking at just over 100,000 900's being sold which will put them on target for the 1M mark in Q2, plus more markets being opened up for the 710,800 and 900 soon and cheaper devices for asia and Europe at the end of july. Q2 earnings wont be that good either but Q3 should start to show improvments and lets face it these rating agencies pretty much suck at what they do, have we all forgot what happens a few years back already.

Now is not a good time to buy a Nokia phone. Will Nokia be around to support you tomorrow? Next Month? Next Year? At this rate maybe not.

derekaw said,
Now is not a good time to buy a Nokia phone. Will Nokia be around to support you tomorrow? Next Month? Next Year? At this rate maybe not.

For the long haul, I'm not sure whether Nokia will be around. However, I'm sure they have enough cash reserves to last at least until your contract ends 2 years later. Anyway that is provided they even want to support your phone "next year" when the warranty period is over.

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