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Moody's cut Nokia rating to junk

Friday, June 15 16:24:35

Moody's slashed Nokia's credit rating to "junk" today after the Finnish cellphone maker cut 10,000 more jobs and forecast a wider-than-expected loss, citing worries about its cash position and slow sales of new Windows phones.

Equities analysts also cut their price targets on Nokia stock on fears the company would continue losing market share to Apple, Google and Samsung Electronics.

Moody's is the third ratings agency to relegate Nokia to non-investment grade status, which means many institutional investors such as pension funds will not buy its bonds. S and P and Fitch made similar moves in April.

Nokia is placing its hopes of a turnaround on a new range of smartphones called Lumia, which use largely untried Microsoft software, but sales have been slow. Nokia ditched its own Symbian operating system and switched to Microsoft last year.

"Today's rating action reflects our view that Nokia's far-reaching restructuring plan... delineates a scale of earnings pressure and cash consumption that is larger than we had previously assumed," Moody's analyst Wolfgang Draack said in a note.

Moody's also said Nokia may also have to contribute more capital or funding to Nokia Siemens Networks, its joint venture with Siemens, if the restructuring costs start to exceed cash flow from operations.