S&P downgrades Nokia, gives negative outlook citing smartphone share drop

S&P downgrades Nokia, gives negative outlook citing smartphone share drop
If you listen to Nokia’s chief executive Stephen Elop at MWC, you’d be left with a swashing feeling of positivity about the company’s transition to Windows Phone. Listen to credit rating agencies like Standard & Poor’s and you’d arrive at a negative of that rosy picture.

Amidst Nokia’s boasting of “very, very steady” sales growth, S&P has downgraded the company’s credit rating from BBB to BBB- citing declining smartphone share as the reason and giving a negative outlook "reflecting the possibility of a further downgrade in the next two years."

"The rating action reflects limited earnings visibility in Nokia's smartphone sub-division," S&P explained. This forced the agency to reassess its estimate for profitability and cashflow of Nokia in 2012.

The worse rating will make it harder and more costly for Nokia to seek liquidity. The Finnish company however responded swiftly by saying that "S&P's rating action will not have a material impact on our current financing costs."

A look back at 2011 shows that Nokia recorded a huge net loss of nearly $1.5 billion (1.2 billion euro) with the hardest hit coming in the last quarter.

S&P found hope in Nokia’s partnership with Microsoft, but feared that with Symbian still accounting for the overwhelming majority of Nokia’s revenue the Windows Phone deal wouldn’t be enough. 


Adding more salt to the wound, S&P concluded:


source: AFP

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36 Comments

1. redmd

Posts: 1872; Member since: Oct 26, 2011

I just wish Nokia would surprise us with a high end Android handset and not just focus on WP.

2. PAPINYC

Posts: 2315; Member since: Jul 30, 2011

Nokia signed a partnership with Microsoft, effectively agreeing to 'go down with that ship'. May it, too, R.I.P.

9. remixfa

Posts: 14605; Member since: Dec 19, 2008

you obviously are not paying attention. WP7 is picking up steam and the new nokia sets are selling quite regularly at my store... because I sell a lot of them. :)

23. kidtronic

Posts: 13; Member since: Nov 29, 2011

Credibility Smackdown! Your store v.s. S&P. FIGHT!

24. threed61

Posts: 259; Member since: May 27, 2011

Who has more cred, a guy who's actually selling products, or a ratings agency that certified trillions of dollars in toxic assets as sound, helping to cause a world-wide economic crisis?

26. remixfa

Posts: 14605; Member since: Dec 19, 2008

pick me!! pick me!!! lolol Put it this way, other than the SGS2, my personal highest selling phone is the nokia 710 right now. Its even beating the SGS1 by a thin margin... which is amazing. When you give customers a knowledgable choice between the Nokia and a comparable android set without putting either system down, many more chose WP7 than you might think. Android fans stick with android just like iOS fans do, but people without a horse in the race are leaning towards WP7 a lot when given the option.

15. JSern

Posts: 282; Member since: May 22, 2011

Another worthless Android slave

3. pokharkarsaga

Posts: 544; Member since: Feb 23, 2012

nokia should learn from this survey and now they should compulsory go with android.they should go with andoid and even continue with WP.android is monster in front of WP.so it will take years to overcome android and not months.nokia,everyone wants to see first nokia android handset.

20. haseebzahid

Posts: 1853; Member since: Feb 22, 2012

ahh lame the one and only Reson Android is saling hot till now is because no one had 3rd choice while most cant get Iphones so they were left with Android and now MS and Nokia gives us another bright and better OS and u people dont even want to check out the third choice seriously u guys are blinded by overspec Android and SGS2 sucks trying porting WP7 demo on it and Android on Lumia800 feel the diffence wht rubish samsung got to market

25. Cyan3boN

Posts: 446; Member since: Feb 23, 2012

You are right man, people blindly go for the specs. WP is a great OS and its gonna come up with a bang this year.

4. tigermcm

Posts: 861; Member since: Sep 02, 2009

this is urking me....seriously droid fans just because you looooove android it doesnt mean that every manufacturer needs to make android or have it as its top priority. it becomes boring after awhile and then where would the option to have choices be? and the thumbs down start in......

5. Humboldt1

Posts: 16; Member since: Dec 29, 2011

As soon as I can buy a Lumia 800 or 900 on sprint I will. I've owned HTC Hero,EVO,and EVO shift. As well as the HTC Arrive. I'll never own an apple product and as long as WP is around I'll never use another android. its funny because I've actually owned and used both OS' and am happier with wp7+,while 99% of android or apple fans have not tried to open their small minds to a different OS,but feel like they know that everyone should only use their OS of choice. To close minded to see multiple OS' to choose from is a positive thing. Do you idiots think you are rooting for the winning OS' by being blind fanboys? Is this just about bragging and neener,neener my OS is the only one left standing mentality? That's lame and pathetic that all you have to live for and argue about is something so petty

7. dmakun

Posts: 382; Member since: Jun 06, 2011

@Humboldt1, Funny that you seem to want to tag others as "fanboys" yet your tone makes you more of a "fanboy" than others. You seem upset that anyone would suggest Nokia go with 'another' OS other than WP7. Whats wrong with the idea of Nokia producing both Android and WP7? my mum thought me never to put 'all' my eggs in one basket (ever heard of that?) and to always leave room for options. I have never owned a WP7 device but I have had the privilege of handling one. IMO its buttery smooth as an OS but its not as robust as a (high end) android device and it doesn't have a key selling point that gives android all its bragging rights "CUSTOMIZATION". People want technology they can control and android (even without rooting) gives the end user an (almost) endless possibility in this regard. Something that my 24hr of handling a (high end) WP7 phone clearly lacked.

18. lubba

Posts: 1313; Member since: Jan 17, 2011

His subject was about choice, nothing about him being a fanboy.

21. bayusuputra

Posts: 963; Member since: Feb 12, 2012

yeah, i never said WP is all bad.. it's fast, efficient, and it's really a workhorse in terms of communication.. i am considering a WP, but after seeing previews of Win8, i think i will wait till WP8 is around.. but my choice of main OS is still android.. it's not the fastest, not the most efficient, but the one that suits me the most.. and WP will be there to complement it.. but i have to say that Nokia made a bad move to kill MeeGo.. the N9 is such a capable device (the only thing that i hate from it is the PenTile) with such a capable OS, and yet it stops there.. and to kill Symbian slowly? Man, that's just like betraying your own son.. i think instead of going all out with WP, why not make it a side OS, like samsung/htc/lg did? it generates revenue, but at the same time Nokia will still be able to develop a better device with a better platform that may be its flagship.. but, having said that, i am really happy with Nokia's WP offerings right now.. it is the reason i am contemplating about WP now.. great hardware quality, great aftermarket service, great reputation, and great design.. whatever it is, i just don't want that Kodak moment (the bankruptcy, not the photographic moment thing) to happen to Nokia.. and i am sure with the backings from MS, it will be able to compete out there.. the more competitions, the better, cus they will try to out do the competitors and we will eventually benefit from that..

6. jihadm

Posts: 1; Member since: Mar 05, 2012

My personal opinion is that nokia should have stayed with symbian and meego and develop it rather going into this ship with microsoft that will sink for sure...wp is too closed and is not that appealing even android is better. it ia a crucial time for nokia.. For me they are the best hardware makers and software also with the very successful symbian belle and meego platforms...this is time for steping back...or die

27. pookiewood

Posts: 631; Member since: Mar 05, 2012

Ahh hell. Here we go with the "open" and "closed" talk again. The majority of Android users don't even know what open means. The iPhone is selling really well and it's a "closed" platform. Take the open/closed talk somewhere else.

8. jellmoo

Posts: 2525; Member since: Oct 31, 2011

Honestly, I am sure that Nokia had to be expecting this. They are in a massive transition period, and the switch to Windows Phone has barely happened yet. They only have two devices to market, and have yet to even hit every market. Their strategy is long term, not short term. They made the choice to be the top tier amongst WP manufacturers, and cemented a unique relationship with Microsoft in doing so. This gives them a lot of extra leverage and Microsoft funded operating capital during the transition. This will be a strong asset during the hard times. I like their plan and the evolution of the execution of the plan. They have chosen to be the king of Windows Phone as opposed to just another Android manufacturer in a sea of Android makers. With Samsung in a dominant position, HTC a step behind and Motorola now Google owned, it would have been that much more difficult to differentiate themselves with Android. The partnership with Microsoft gives them the ability to make stunning devices, running a beautiful OS and then incorporate some of their more interesting back end features. They are in for a long battle, but with Microsoft backing them, they have the resources available to stay in that battle.

12. tigermcm

Posts: 861; Member since: Sep 02, 2009

THANK YOU sheesh at least someone has some sense. Nokia is giving windows its undivided attn why because if they made andriod of course with fandroids crying over android nokia's focus would primarily be android causing windows to be on the back burner. This is currently happening with Sprint and Verizon where is their focus? who is currently on the back burner? exactly

13. remixfa

Posts: 14605; Member since: Dec 19, 2008

exactly. people that are making fun of Nokia only see the short side. On the long term there is potential for heavy growth. Nokia is doing a full switch from an independent company with symbian, to ironically a symbiotic company with MS making WP7. In order to make room for WP7, the old stock has to be cleared out first, which means that their warehouse is going to be emptied before it can be refilled. MS has their back for the long haul, and if things get really bad in nokia land, im sure MS has a contingency to buy them and absorb them into the MS fold. But I dont see where its going to get really bad. There is a low point before it raises, which is now... .but the new handsets are already the "gotta have it" WP7 sets.. now they just need to make people want WP7 more. That comes from MS through people getting used to it on the up coming windows8, the new Xbox look, and advertising. All MS products are about to look/act the same, which is going to make the jump to WP7/8 not only incredibly easy, but incredibly logical for many people. Less than half of the world has smartphones. Thats almost 4 billion potential customers + converts from other OS's. Windows is on BILLIONS of computers. As people convert to Windows 8 the likeliness of them buying a windows phone increases exponentially.

14. tigermcm

Posts: 861; Member since: Sep 02, 2009

nothing else needs to be said you finished the story next article please. Good job

10. Bluesky02

Posts: 1439; Member since: Dec 05, 2011

Agree with remixfa I'm sure Nokia is recovering little by little. Things will go at slow pace but will gradually improved. If things doesn't go well, be sure Microsoft will back Nokia.

11. nosybummer

Posts: 17; Member since: Mar 05, 2012

@jellmo Exactly and they only have released only two windows phone os's 7 and 7.5 those who are doubtful wait till they release appolo and other versions and remove limitations like no external storage,file manager,High Res displays etc.. in another unrelated story nokia pureview 808 is going to generate some substantial income and fan base

16. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Sounds like white-knuckle time for Nokia - they have to be hoping the WP business acts as a firewall to stop the erosion in Symbian sales/market share. BBB to BBB- isn't the end of the world. It could have been worse.

17. lubba

Posts: 1313; Member since: Jan 17, 2011

S&P is quick to draw the gun. Hope they shoot themselves in the foot. And to fandroids nagging Nokia this Nokia that, just STFU!

19. bragzter

Posts: 53; Member since: Feb 21, 2012

I don't believe Nokia couldn't save Symbian, just look at how beautiful Belle is. Abandoning MeeGo was a mistake, the N9 sold quite a bit despite no marketing whatsoever and declaring dead on arrival. They can make Windows Phone work, just have to work extremely hard to do so. Also, they could have still push a few Android handsets. It's obvious people want Nokia handsets, and if they make the right moves, they will be back on top, slowly but surely

36. kanagadeepan

Posts: 1189; Member since: Jan 24, 2012

+1... But with Trojan Horse commanding in their camp, death of MeeGo and Symbian is expected... Further people buying Nokia-WP7 handsets are NOT buying because its a WP phone; they buy because its from NOKIA... (atleast in my country India, where there are a large number of NOKIA fans)...

22. HUA88

Posts: 3; Member since: Mar 05, 2012

the lumia smartphone phone is sell like hot cake in my place..malaysia....other os user must try lumia series handset.....really super smooth.....

28. Humboldt1

Posts: 16; Member since: Dec 29, 2011

@Droidrage_Doug just curious do alot of wp7 users troll on android threads? Idk because I don't troll as you do for no apparent reason but to talk trash. Good to see you're still ducking my questions for you on the other wp7/nokia thread where you try to talk about "A game" as well I see.

29. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

@Humboldt - are you cyber-stalking me? Your post that you refer to on the other thread didn't merit a response, so now you appear to be attempting to get a response by following me around the site.

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