PARIS: The international ratings agency Moody's
downgraded on Monday its ratings for the Finnish telephone maker Nokia owing to
poor prospects for future sales.
Moody's
also maintained a a negative outlook on senior debt owed by Nokia.
Moody's
downgraded Nokia from "Baa3" to "Baa2", calling the move a
response to Nokia's announcement last week of a severe fall in first-quarter
sales of mobile telephones.
"Moody's
believes that the structural challenges facing Nokia's mobile phones segment
may not be easy to address, such as the market share gains recorded by makers
of very low-end phones or new phone promotions by Chinese carriers," a
statement said.
"This
precipitous decline is of particular concern considering that Nokia's mobile
phones segment was still the core income generator for the Nokia group in 2011,
when it contributed 1.5 billion euros ($1.9 billion) to the group's operating
profit of 1.8 billion euros.2
Nokia,
the world's biggest mobile phone maker which is struggling on the highly competitive
smartphone market, said several factors had affected its Devices & Services
business to a greater extent during the first quarter than previously expected.
The
company is scheduled to publish its detailed first-quarter earnings report on
April 19.
Nokia
chief executive Stephen Elop has called the first quarter sales
"disappointing" but noted the Devices & Services business was
"in the midst of transition."
The
Finnish company is undergoing a major restructuring, phasing out its Symbian
line of smartphones in favour of a partnership with Microsoft that has produced
a first line of Lumia smartphones.
Nokia
is depending heavily on the new phones to help maintain its ranking as the
world's biggest maker of mobile phones as it operates in a rapidly changing
landscape with RiM's Blackberry, Apple's iPhone and handsets running Google's
Android platform take growing bites out of its market share.
But
just days after launching its new flagship Lumia 900 model in the United
States, the company acknowledged on Wednesday that the smartphone contained a
software bug which could cause users to lose their Internet connection.
"Nokia's
current Baa3 rating reflects Moody's expectation that Lumia devices will be
accepted in the market in 2012 with the help of price and marketing support and
that it will become the third smartphone system next to Google's Android and
Apple's iOS," the ratings agency said.
But it
also forecast "that the margin pressure in Nokia's mobile phones segment
and the downward migration of lower-end smartphones into the feature phone
category will continue.
"Nokia
is therefore more reliant on the Smart Devices segment and thus the Lumia
product family, thereby reducing the group's revenue diversification,"
Moody's concluded.
-
AFP/de
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