HELSINKI, Finland (AP) - Nokia credit rating was downgraded on Wednesday as the world's largest producer of mobile phones sees its competitive position in the smartphone segment deteriorate.
Moody 's Investors, said it has downgraded the debt rating two levels phonemaker Finnish A3 to Baa2 because of a "severe decline" of Nokia's business position. A significant reduction because companies raise money through issuing bonds and through actions and the lowest degree implies potentially higher costs.
"This deterioration has been caused by a loss of competitiveness of the portfolio of Nokia smartphone based on Symbian and the transition of its operating systems to Windows Phone platform," said Moody's senior vice president of Wolfgang Draack in a note research.
Moody said it will take time for Nokia to your Windows-compatible operating systems, even after reaching an agreement with Microsoft.
Draack said the benefits of the transition to a Windows environment may not emerge until the second half of 2012, while the increasing price pressure and gaps in the portfolio of company phones continue to weigh on competitiveness.
On a positive note, Moody said the erosion of sales volumes of Nokia and profit margins "should be limited," thanks to new models of phones such as dual SIM card phone, mobile and smart phones using the new Anna Symbian version of the platform.
Moody also stressed that Nokia has a strong liquidity and capital structure ", which should support the transition process to cover burn money as possible."
Last week, Nokia announced a loss of euro368 million (533 million) in second quarter sales of euro9.3 billion (13.5 billion) as the largest corporation in Finland continues to lose ground to both rivals top smartphone and competitors in the market for low-and middle-level phones.
For the first time the once-dominant mobile phone giant slipped behind iPhone Apple Inc. 's in the second quarter in terms of number of smartphones shipped to suppliers.
Nokia shares are trading 0.8 percent to euro4.01 on the Helsinki Stock Exchange.
Moody 's Investors, said it has downgraded the debt rating two levels phonemaker Finnish A3 to Baa2 because of a "severe decline" of Nokia's business position. A significant reduction because companies raise money through issuing bonds and through actions and the lowest degree implies potentially higher costs.
"This deterioration has been caused by a loss of competitiveness of the portfolio of Nokia smartphone based on Symbian and the transition of its operating systems to Windows Phone platform," said Moody's senior vice president of Wolfgang Draack in a note research.
Moody said it will take time for Nokia to your Windows-compatible operating systems, even after reaching an agreement with Microsoft.
Draack said the benefits of the transition to a Windows environment may not emerge until the second half of 2012, while the increasing price pressure and gaps in the portfolio of company phones continue to weigh on competitiveness.
On a positive note, Moody said the erosion of sales volumes of Nokia and profit margins "should be limited," thanks to new models of phones such as dual SIM card phone, mobile and smart phones using the new Anna Symbian version of the platform.
Moody also stressed that Nokia has a strong liquidity and capital structure ", which should support the transition process to cover burn money as possible."
Last week, Nokia announced a loss of euro368 million (533 million) in second quarter sales of euro9.3 billion (13.5 billion) as the largest corporation in Finland continues to lose ground to both rivals top smartphone and competitors in the market for low-and middle-level phones.
For the first time the once-dominant mobile phone giant slipped behind iPhone Apple Inc. 's in the second quarter in terms of number of smartphones shipped to suppliers.
Nokia shares are trading 0.8 percent to euro4.01 on the Helsinki Stock Exchange.
