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.