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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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.

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.

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.

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...

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.

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 :

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?)...

Maybe, if they actually did both Android, MeeGo, and WP7. They would get much better business, but no, they had to put all their nuts in one basket and rely on that to save their arses. Which was a bad business movement, to ignore another market.

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.

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.

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

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.

Many supposedly informed people seem to have forgotten that Nokia are network owners as well as Phone manufactures lol!!! They will not go down as quickly as you think.

Edit : Take a look -- http://en.wikipedia.org/wiki/Nokia_Siemens_Networks

Combined 2010 revenues exceed € 12.7 billion, making the company one of the largest telecommunication equipment makers in the world

WP7 said,
Many supposedly informed people seem to have forgotten that Nokia are network owners as well as Phone manufactures lol!!! They will not go down as quickly as you think.

Edit : Take a look -- http://en.wikipedia.org/wiki/Nokia_Siemens_Networks

Combined 2010 revenues exceed € 12.7 billion, making the company one of the largest telecommunication equipment makers in the world

Revenue is pointless if you're not profitable, on your own source that division of Nokia lost $300mn

thealexweb said,

Revenue is pointless if you're not profitable, on your own source that division of Nokia lost $300mn

You need to read further about changes they are making that will save them €1.35 million in 2013 alone thus negating any losses....In a changing economic environment both divisions of Nokia are changing to ensure survival.

WP7 said,

You need to read further about changes they are making that will save them €1.35 million in 2013 alone thus negating any losses


Can I see a link to that because I don't understand how a saving of 1.35 million Euros will compensate for a 300 million loss?

Manish said,

Can I see a link to that because I don't understand how a saving of 1.35 million Euros will compensate for a 300 million loss?

it'll only take them 300 years to pay off at that rate

Manish said,

Can I see a link to that because I don't understand how a saving of 1.35 million Euros will compensate for a 300 million loss?

dammit i typoed should have read billion lol!!

WP7 said,
Many supposedly informed people seem to have forgotten that Nokia are network owners as well as Phone manufactures lol!!! They will not go down as quickly as you think.

Edit : Take a look -- http://en.wikipedia.org/wiki/Nokia_Siemens_Networks

Combined 2010 revenues exceed € 12.7 billion, making the company one of the largest telecommunication equipment makers in the world

I was thinking about that too... But I guess Nokia and NSN are treated separately by the credit rating agencies?

Anyway I always find it quite interesting that a company that produces only consumer products (Apple) earns insanely more than the companies that provide the infrastructure (and the R&D) that enable the product to work in the first place (e.g. NSN, Ericsson, Alcatel-Lucent, Motorola, the carriers, etc.).

But these speculation over WP8 will prevent sale of units. MS must clarify this.
Starting by me, I'm not buying Lumia 900 just because i'm aren't sure that this device will be WP8 upgradable.

i believe in WP potential over the two other OS, but if this happen it will hurt WP image. i think it's worst then having a fragmented OS (Android i thing have this problem )

nukez said,
But these speculation over WP8 will prevent sale of units. MS must clarify this.
Starting by me, I'm not buying Lumia 900 just because i'm aren't sure that this device will be WP8 upgradable.

i believe in WP potential over the two other OS, but if this happen it will hurt WP image. i think it's worst then having a fragmented OS (Android i thing have this problem )

What is WP8 that you are so sure will be better than what is on the Lumia now? I understand the desire to have the newest but if i could get the Lumia 900 I would get it now. The phone will be supported and I am sure it will get new features as it matures. The phone is good now and if it gets the new OS maybe that will not be a great thing. Who knows WP8 may not be as compelling as they are making it out to be. It could be a iPhone 4/4S thing.

Maybe this is not Nokia's fault but if WP8 is not compatible with current (ex: Lumina 800/900) WP7 phone, this could spell doom.

At this point, Nokia is in freefall. The cash hoard it has from the good times won't last long when it's bleeding $2 billion a quarter.

I predict within two years Nokia will either get swallowed up by another company (probably Microsoft), or go bankrupt. Either way, Nokia can't possibly recover from this.

yowanvista said,
The WP strategy is doomed, people would never buy current devices which would have their OS obsolete within 4-5 months.

Nice try, but nothing is confirmed on that rumor.

yowanvista said,
The WP strategy is doomed, people would never buy current devices which would have their OS obsolete within 4-5 months.

so can you confirm that? finally, we're so much smarter right now

and I hate to break it to you but most customers don't care about this cause they never read one freaking tech article let alone idiotic rumors… and anyways if security of future updates were important then only google employees would use android

yowanvista said,
The WP strategy is doomed, people would never buy current devices which would have their OS obsolete within 4-5 months.

Didn't stop Android.

Hasn't been confirmed though.

Windows Phone's biggest problem is selling the device to consumers as retail continue to push iPhone and Android without even considering pushing WP. Why should they bother when employees have such an easy time selling Android and iPhones.

That's is Microsoft's biggest failing.

yowanvista said,
The WP strategy is doomed, people would never buy current devices which would have their OS obsolete within 4-5 months.

You mean like my phone now. Stuck two updates behind the newest OS?

MS Lose32 said,

Well Apple later got a CEO that actually had "vision".

MS saved Apple just like they will do with Nokia.

lol, bunch of people can just lower someone's rating and they're in deep **** Gotta love the FREE MARKETS today

citan said,
lol, bunch of people can just lower someone's rating and they're in deep **** Gotta love the FREE MARKETS today

lawl true! And see Nokia is now after him and are convincing him xD

bogas04 said,

lawl true! And see Nokia is now after him and are convincing him xD


Who's "him"? Did you think Fitch Ratings is the name of an individual?

Manish said,

Who's "him"? Did you think Fitch Ratings is the name of an individual?

my bad i tried to find his identity from above post :

"In its statement, "Fitch say" that Nokia was still having serious financial issues, even though Nokia claims it will improve, adding, "Fitch is currently not convinced" that Nokia can attain this over the course of 18 months."

All that made it seem it was he ... Nevermind

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:"

If it was an individual, it would've said "Fitch says" and the article mentions the full name, Fitch Ratings, in the sentence just before the one you quoted. Also, I'd personally be surprised to see a single person handing out credit ratings. But yeah, never mind.

Jarrichvdv said,
**** Fitch. Seriously, I don't care if they're convinced or not about the future of Nokia.
I know that I am.

I hate to break it to you but "love" and "faith" are not currencies that are currently accepted by the world's stock markets.

MS Lose32 said,

I hate to break it to you but "love" and "faith" are not currencies that are currently accepted by the world's stock markets.

Neither are BitCoins. But they seem to be going pretty well.
Sorry, couldn't resist. But yes, you do have a good point.
Unless you live in Equestria with rainbow ponies, Love is not going to get you very far in economics.

MS Lose32 said,

I hate to break it to you but "love" and "faith" are not currencies that are currently accepted by the world's stock markets.
Fair point, yet your hate (e.g., your name) seems to be hoping that the exact opposite is an accepted currency.

MS will help Nokia, Nokia will help MS.
And seeing Lumias used everywhere to define Windows Phone (say Facebook's new app's announcement etc) a downfall for Nokia can not happen IMO.

I've said this already in the forum but...

Investing in Nokia right now will have one of two outcomes long term. Huge success or massive failure. If anyone thinks they can call it either way they are an idiot. It's a betting mans game.

lt8480 said,
I've said this already in the forum but...

Investing in Nokia right now will have one of two outcomes long term. Huge success or massive failure. If anyone thinks they can call it either way they are an idiot. It's a betting mans game.

Even though Nokia is financially screwed, they are a pretty decent brand with some popularity... which means, imo, they are a good candidate for being bought out. Good for investors. Alternately they just go bankrupt... so there's that.

no-sweat said,

Even though Nokia is financially screwed, they are a pretty decent brand with some popularity... which means, imo, they are a good candidate for being bought out. Good for investors. Alternately they just go bankrupt... so there's that.


meh their brand is pretty much like kodak in the picture industry which had a huge name and 100 years of history yet they went bankrupt..


Thats sale is nothing and cant make it profitable.. They need to sell at least 10 times more than what they are selling now... Check Nokia's financial statement. their smart phones sales are dropping in millions of number. Its not only about lumia but other smart phones too... when they say sold out its not 1 million sold out!! it would be somewhere around 50k or something units

simplezz said,

Stock levels were low to begin with. Some reports of only 4 Lumia devices for an entire store.

Well if you're talking about the article in question, it says AT&T's online store. Did you walk in to their warehouse and check inventory levels there too?

still1 said,

doesnt matter if its instore or online.. low stock is low stock http://allthingsd.com/20120416...-atts-online-store-but-why/

You can try to spin it that way all you want, but if they're selling more than they expected, that's a good thing. More people will get to see these phones in public and word of mouth will start to get more people checking them out.

Your FOSS friend simplezz was trying to make it sound like they only sold 4 phones online. Just waiting on MS Lose32 to check in now and you guys can combine your powers to summon Captain Planet.

Enron said,

You can try to spin it that way all you want, but if they're selling more than they expected, that's a good thing. More people will get to see these phones in public and word of mouth will start to get more people checking them out.

Your FOSS friend simplezz was trying to make it sound like they only sold 4 phones online. Just waiting on MS Lose32 to check in now and you guys can combine your powers to summon Captain Planet.


"FOSS friends"? I take that as a badge of honor!

Anyways, it's good that the Lumia is selling well. As much of an Android fanboy I am, I won't deny the fact that competition is ALWAYS good! Even when it's coming from MS.

Enron said,

Your FOSS friend simplezz was trying to make it sound like they only sold 4 phones online.

Not it didn't. To me it sounds exactly as he meant it, that some AT&T locations only had 4 phones in stock. Nothing he said even sounded as if he implied that only 4 were sold online.

Enron said,

You can try to spin it that way all you want, but if they're selling more than they expected, that's a good thing. More people will get to see these phones in public and word of mouth will start to get more people checking them out.

Your FOSS friend simplezz was trying to make it sound like they only sold 4 phones online. Just waiting on MS Lose32 to check in now and you guys can combine your powers to summon Captain Planet.


when did this become an article about Lumia?? this is not about Lumia... Its about Nokia's overall sales.. nokia is falling pointing out that makes some people hurt.

Enron said,

Well if you're talking about the article in question, it says AT&T's online store. Did you walk in to their warehouse and check inventory levels there too?

Did you do it? The point is that "sold out" can mean 1000 or 1,000,000 units sold.
Only real numbers are a a real indicator.

still1 said,

Thats sale is nothing and cant make it profitable.. They need to sell at least 10 times more than what they are selling now... Check Nokia's financial statement. their smart phones sales are dropping in millions of number. Its not only about lumia but other smart phones too... when they say sold out its not 1 million sold out!! it would be somewhere around 50k or something units


I think that is a silly number 50k. why would they bank on a device and only make 1 million of them assuming that they only made 50k of each color. Maybe they only made 50 k of the white but the black was on the Amazon best seller list for 2 weeks I think. If that would put them on top of that list then the other phones on that list must be selling a lot less.

still1 said,

Thats sale is nothing and cant make it profitable.. They need to sell at least 10 times more than what they are selling now... Check Nokia's financial statement. their smart phones sales are dropping in millions of number. Its not only about lumia but other smart phones too... when they say sold out its not 1 million sold out!! it would be somewhere around 50k or something units

At least 10 times more than what they're selling now? I don't think you're being realistic here. Apple doesn't even sell 10 times what Nokia does in terms of smartphones.

still1 said,
Nokia in trouble.. Dont see any sign of getting better.

Nokia said that they expect to sell about 1.8 million Lumia 900 in the US by end of Q2. I think Q3 could be a real problem. The new iPhone will steal most of the phone sales and WP8 Apollo is around the corner, so everyone will wait until that is released. Depending on the handsets that Nokia brings to the Apollo launch it could be a huge 4th quarter (PureView, Kinect, etc)

UndergroundWire said,
Don't worry Microsoft will save you. Microsoft likes junk. Just look at the tiles.

Oh, c'mon, personal opinions are one thing, but why so negative all the time?

Fritzly said,

Did you do it? The point is that "sold out" can mean 1000 or 1,000,000 units sold.
Only real numbers are a a real indicator.

Never said I did, but I'm also not the one speculating on how many they sold on the online store.

Mr.ed said,

Oh, c'mon, personal opinions are one thing, but why so negative all the time?

My opinions are not always negative. I would ask you why are you only reading the negative ones. That is a whole psychological thing I don't want to get into though.