Nokia is moving towards a financial disaster. Moody’s rating agency downgraded the rating of the Finnish company, already in “junk” category, by two notches, from BA1 to BA3. On July 9, the financial blog Seeking Alpha headline read: “Nokia is finished: Prepare for bankruptcy”. Nokia shares fell on July 9 by over 3% to below €1.50 for the first time since 1996, amid increasing fears of investors for the future of the Finnish mobile phone manufacturer.
Recently, Fitch Ratings has revised down from “BB plus” to “BB minus” the long-term debt rating for the Finnish mobile phone manufacturer Nokia, as the perspective is associated with a negative outlook, according to a press release. Previously the agency warned that it will carry negative rating actions if it is not convinced that Nokia could stabilize the decline in revenue and will be able to generate operating profit. Fitch believes that Nokia currently doesn’t have a portfolio of products that can offset the recent losses suffered by the company in the second quarter of 2012 and warns that there are significant risks for the Nokia performance to deteriorate further.
In April, Fitch Ratings has revised down the rating for Nokia’s long-term debt at ‘BB plus’, in the “junk” category, not recommended for investment. The other two major credit rating agencies, Standard and Poor’s and Moody’s Investors Service have downgraded this year rating Nokia to “junk” (not recommended for investment), after the company announced it would eliminate another 10,000 jobs globally by the end of 2013.
Nokia also announced that in the first three months of this year it sold 82.7 million handsets worldwide, down from 108 million in the first three months of 2011. By region, sales of Nokia in Europe have decreased by 32% in the first quarter to 15.8 million units, while the Chinese market sales of Nokia phones have dropped by 62% to 9.2 million units.
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