Now S&P downgrades Nokia stock to "junk"
Only a couple of days after Fitch downgraded Nokia stock to “junk” status and gave the Finns a negative outlook, now Standard & Poor’s follows suit by similarly decreasing Nokia’s credit rating to “junk” or BB-. This removes the company from S&P’s list of low investment companies to non-investment status, and on top of that the rating agency gave the Finns a negative outlook with the possiblity of another downgrade happening in the future if the situation doesn’t stabilize.
Here’s the list of factors that S&P wants to see dealt with to fix the rating:
- revenues in the Devices and Services division should stabilize,
- cash burn should decline significantly,
- non-IFRS operating margins should return to at least mid-single digit percentage levels.
Nokia defended its positions earlier when Fitch dropped its ratings, and it echoes the same arguments now:
"As we have detailed in recent announcements, Nokia is in the middle of a transformation program which encompasses every aspect of our business. We are implementing a decisive action plan to position our company for future growth and success. The main focus of these actions is on lowering the company's costs, improving cash flow and maintaining a strong financial position, while bringing attractive new products to market," Nokia CFO Timo Ihamuotila responded.
Nokia’s net cash reserves stand at around $6.48 billion (4.9 billion euro) currently.
source: Standard & Poor’s, Nokia
