Nokia's debt downgraded to less than junk

Nokia's debt downgraded to less than junk
How potentially worthless is debt issued by Nokia? After the Finnish based handset manufacturer purchased the half of a joint network equipment venture owned by Siemens for $2.2 billion, S&P lowered its rating on Nokia debt by one notch from BB- to B+. Nokia's debt was already at junk levels before the downgrade. Bonds rated at that level or lower are not allowed in the portfolios of certain bond funds.

Overall, the credit agencies rating on a business is like a credit report on a person as the lower the rating, the more money it will cost it to borrow money. Meanwhile, S&P rival Moody's put Nokia's credit rating, currently at B2, on review with the possibility of a downgrade to Ba3. Fitch, another rating agency, agreed with Nokia that the deal made sense, but added that the future visibility of Nokia's handset business was limited.

Buying out Siemens gives Nokia 100% ownership of a company involved in the technology needed to run 4G networks. But the purchase might have come at too high a cost for Nokia as S&P now forecasts that the company's net cash on hand at the end of the year will be just 1.3 billion Euros ($1.7 billion USD).

Nokia, looking to keep stockholders from panicking, responded by saying that its financial position remains strong and the company has access to an untapped credit facility. "We will continue to prudently manage our cash resources post-transaction," Nokia said.

source: Reuters

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106 Comments

106. GeorgeMarvin

Posts: 1; Member since: Aug 23, 2013

One question before we say Nokia is ready for the financial graveyard: Does MS own an exclusivity clause with Nokia, or can Nokia just switch to Android and return to greatness, or is it saddled with an exclusivity deal that insures that it's going to sink? If it can, Nokia should just bite the bullet and switch from Microsoft to Android, or at least offer both OS on all their phones, or sell out to MS before they lose even more market share. If it's stuck with a multi-year exclusivity deal, it's probably terminally ill, with a prognosis of corporate death in a couple of years. MS wouldn't intentionally tank a company just to make another try at getting a foothold into the cell phone OS market, but a good argument could be made for depraved indifference. As a customer, I would like a 41 megapixel phone, but I sure wouldn't give up all the benefits of Android and maybe a half-million apps, with thousands more being produced every day, many of which are free, just to get that ONE feature. Guess I'll just have to settle for 8 megapixels. Nokia picking MS over Android just doesn't seem like a good business decision. People have grown tired of paying the ever-increasing prices that MS charges for its software; if Android published a competing desktop/laptop system with its already existing, massive, dynamic developer base, Windows would probably be on the defensive in a matter of months. Unlike Ubuntu or Linux, we're all familiar with Android, we already use it every day, and it's got a lot of goodwill built up. It's got an app for anything we want to do. It comes with the Chrome browser. It's dependable, too.

105. Aendil

Posts: 5; Member since: Jul 06, 2013

Whatever the dudes at SP say, Nokia makes far better phones that all the rest. Period.

104. nashoa

Posts: 12; Member since: Jun 18, 2013

Really wonderful and beautiful

102. kindlefireowner

Posts: 504; Member since: Dec 05, 2011

I put my money where my mouth is because I currently own the stock. Nokia will survive as well as windows phone as the 3rd OS. The key is not trying beat Samsung or Apple, The key is to make a quality product that people want to buy. The people who comment on phone arena do not represent the average consumer. If they did then Apple would not be selling over 10 million Iphones worldwide every month.

92. networkdood

Posts: 6330; Member since: Mar 31, 2010

Elop still works for Microsoft as he is just softening up Nokia for a MS buyout and is driving the price down as low as possible.

90. 7thspaceman

Posts: 1597; Member since: Feb 14, 2011

there was a Rumor lthis week indicating Nokia now might go up for sale again I think Microsoft will ether buy Nokia completely which was something they could not do before because Siemens owned part of Nokia and Microsoft got charged so much by Siemens they walked out the last deal or Microsoft will buy up the controlling interest in Nokia to insure they have an OEM that will make Windows Smart phones because most of Microsoft's OEM'S currently make only one or two Windows smart phones. Microsoft's OEM's may add a new model this year because Windows smart phones can now run with Quad core CPU's and Full 1080P HD screens. Windows Smart phones are going to get major software updates this summer and in 2014 with the windows Phone 8 blue updates so that they will fully be able compete with Android and Apple Iphones.

88. InspectorGadget80 unregistered

Nokia gonna gave too make a Android handset or loose more money from their account

81. Loubielou

Posts: 603; Member since: Jul 11, 2012

Mr Elop is downgrading the Worth of Nokia,so is old employees Microsoft with step in an overtake Nokia,people have seen this plan happening for ages,as Microsoft is not as popular as Apple,as Microsoft needed someone to improve there portfolio,an how the Nokia Board gave in to Mr Elops plan is just Amazing,the name of Nokia use to be so popular,but Samsung have just loved the downgrade of Nokia,an solved all Nokias problems an now loving there dominance in Smartphone Market

51. belovedson

Posts: 1061; Member since: Nov 30, 2010

Samsung buy them.

53. MachidoDen

Posts: 202; Member since: May 30, 2013

Samsung is not interested in buying Junk

57. user996

Posts: 221; Member since: Feb 25, 2013

because samesung itself is junk LoL

58. MachidoDen

Posts: 202; Member since: May 30, 2013

LoL If ur nokia is not on top 5 then its not samsung's problem Being on top means being KING u go and buy 1 million lumia alone to help nokia :D

82. TROLL

Posts: 4851; Member since: Apr 13, 2012

+1 you just shut him ®

62. WHoyton1

Posts: 1635; Member since: Feb 21, 2013

Samesung......a person with sub par intelligence like yourself may actually laugh at that.....and mind explaining how one of the biggest companies in the world is junk .....if there junk surely you could do better.....idiot

63. MachidoDen

Posts: 202; Member since: May 30, 2013

Lol Dont worry i will try to tell samsung that please have some mercy on nokia I will mail them That please give nokia atleast 1 chance so that they can sell atleast 1 million SU-mia :D

66. WHoyton1

Posts: 1635; Member since: Feb 21, 2013

Lol +1

74. -box-

Posts: 3991; Member since: Jan 04, 2012

Folks said the same thing about Nokia not long ago. Could samesung be making the same mistakes as other companies not long ago? They sure seem fascinated with their own hubris and unnecessarily flooding the market with needless derivations. They need to reel themselves in before they take a tumble like blackberry and HTC and even Nokia. Make just two or three tablets, one Note-sized thing, one flagship, one rugged, one midlevel, one entry level, and make a few new basic and "feature" phones.

46. ItsMyChoice

Posts: 37; Member since: Mar 19, 2013

Mean while wmpoweruser.com/ nokia-siemens-networks-wins-200-million-contract/

43. UrbanPhantom

Posts: 949; Member since: Oct 30, 2012

Samsung stock recently dropped about 25 billion, due to the S4 failure; basically the entire value of Sony. Now there's a falling knife for you ;o)

40. MachidoDen

Posts: 202; Member since: May 30, 2013

Nokia better focus on feature phones because there is no hard competition :D

27. MachidoDen

Posts: 202; Member since: May 30, 2013

Nokia u really deserve this keep going on Bring some more lumia and soon samsung will kick u so hard that u can't even think of making a flagship Note 3 will really hurt u nokia

37. abcdefgh

Posts: 471; Member since: Mar 29, 2013

samsung itself is struggling to raise their stock price. coz their own s4 kicked them so hard. troll harder

39. MachidoDen

Posts: 202; Member since: May 30, 2013

Yeah still they sold 20 million s4 in just few weeks which is faster than s3 and what about ur lumia?? Which is still cheaper at price than s4 ,but cant even cross 5 million mark Lol

25. Jehovah

Posts: 69; Member since: Jun 25, 2013

I guess you need a six figure anual salary to fully understand a few of those thesis. Nokia has strong signs of recovery and made a acquisition that holds some sense, considering its NSN is making a profit, and gets downrated. Samsung sells millions of its S4, puts record results, and sees billions of its value evaporate of night. Doesn't make that much of a sense.

33. roscuthiii

Posts: 2383; Member since: Jul 18, 2010

A very few rich are playing a game where only they get richer.

24. FlushGordon unregistered

NOKIA = Junk

36. abcdefgh

Posts: 471; Member since: Mar 29, 2013

it takes time to realise that things you thought junk are not so but rather very good

41. MachidoDen

Posts: 202; Member since: May 30, 2013

Dont lose this spirit Keep on trying But lumia wont sell like hotcakes :D

14. neutralguy

Posts: 1152; Member since: Apr 30, 2012

I dont know why purchasing a profiting company got them downgraded. It's actually good for them for having a full access and use of nokia-siemens. Also,all the profits will be for them.

73. -box-

Posts: 3991; Member since: Jan 04, 2012

Apparently a lot of folks/trading houses didn't expect such success so soon, so their purchases of "short" stocks isn't being turned over fast enough nor in the right way to be profitable, so the houses and "powers that be" are downgrading to encourage folks to buy the "short" futures. There's more to it than that and even I don't fully understand it, but it's an attempt to try to make more money for an already-rich stockholding organization

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