Nokia's Credit Rating Downgraded Amid Declining Q2 Sales

Nokia Corp., a struggling smartphone manufacturer, witnessed a significant decline in its credit rating due to its decreased sales of hand-held devices. The company's long-term debt rating was downgraded to BBB from BBB+ by Standard & Poor's, while its short-term rating was affirmed at A-2. This downgrade comes on the heels of a previous credit rating downgrade by Moody's, which cited a "severe weakening" of Nokia's business. The partnership between Nokia and Microsoft is seen as a potential game-changer, but S&P expects low operating margins and further market share losses during the transition period.

Key Takeaways:

• Nokia's long-term debt rating was downgraded to BBB from BBB+ by Standard & Poor's due to declining Q2 sales of hand-held devices.
• The company's short-term rating was affirmed at A-2, but the outlook remains negative.
• S&P believes the partnership between Nokia and Microsoft could help improve the company's competitive position, but expects low operating margins and further market share losses.
• Moody's previously downgraded Nokia's credit rating to Baa2 from A3 due to a "severe weakening" of its business.
• Nokia's share price declined by over 2% at mid-day on August 2, 2011, following the downgrade announcement.
• The company's partnership with Microsoft is a strategic move aimed at improving its smartphone portfolio.
• S&P predicts low operating margins and further market share losses during the transition period.

Statistics:

• Nokia's long-term debt rating was downgraded from BBB+ to BBB by Standard & Poor's.
• The company's short-term rating was affirmed at A-2.
• The share price of Nokia declined by 2.07% at mid-day on August 2, 2011, to $5.43.
• Moody's previously downgraded Nokia's credit rating to Baa2 from A3.
• The negative outlook for Nokia's credit rating remains in place.

Sources:

• Standard & Poor's, August 2, 2011: "Nokia Corp. (NOK) Downgrade" [COMTEX]
• Moody's, July 29, 2011: "Moody's Downgrades Nokia to Baa2"
• Comtex SmarTrend Alert, July 29, 2011: "DOWNTREND on 02-11-2011 for NOK @ $9.42" [www.mysmartrend.com]
• Comtex News Network, Inc., 2004-2011: Copyright & Trademark Information [www.mysmartrend.com]