Moody's agency downgrades Nokia's credit rating to 'junk' status
June 15, 2012 at 17:24 GMT | By Darlington Moyo
Nokia has had its bonds downgraded to "junk" status by ratings agency Moody's. Moody's downgraded its long-term credit rating Nokia by one notch to the speculative level of "Ba1" and said its outlook remained negative. Moody's senior vice president Wolfgang Draack said:
"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. A return to profitability depends on Nokia successfully transitioning its range of smartphones to the new Windows operating system and stabilising its feature phone business.Following the news, Nokia, which only recently lost the world number one ranking it had held for 14 years, saw its share price plunge more than 16 percent on the Helsinki stock exchange.
As per usual, doom-mongers, fandroids and iSheep alike will be dancing on Nokia's to-be grave. The truth is that Nokia is in a spot of bother and needs major restructuring, hardwork and a bit of luck. Nokia chief executive Stephen Elop has already announced 10,000 more job cuts as part of deep additional cost-cutting measures. "These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength," said Elop. That, coupled with the fact that Nokia have a willing and able partner in Microsoft should see the Finnish giant's fortunes turn in the not too distant future.
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