Nokia Corp., the Finnish phone maker already in a world of hurt, had its credit rating downgraded to junk status by Moody’s Investors Service on Friday.
The company's rating fell a notch to Ba1, from Baa3, and is now held at junk status by all three major credit ratings agencies, including Fitch and Standard & Poor's.
On Thursday, the company said it would slash 10,000 jobs by the end of 2013, shut down several research and manufacturing facilities and restructure the business. Last year, Nokia said it would reduce its ranks by 14,000 positions.
The company is the largest manufacturer of mobile communication devices in the world, claiming a third of the global market, according to Moody's.
But the ratings agency had a negative outlook for Nokia, writing in its report that the company's "structural challenges ... may not be easy to address."
Nokia's unit sales for its mobile phones were down 16% year over year in the first quarter, causing revenues for the entire segment to tumble 35%, the company said earlier this week.
And it may not be the last "precipitous decline" for Nokia as manufacturers of low-end phones and promotions from Chinese carriers encroach on its position, according to Moody's.
The company is also struggling to transition smartphones from the Symbian system to Windows-based Lumia devices.
Nokia is becoming increasingly dependent on the Lumia line, which it anticipates to fall in step behind Google's Android products and Apple's iOS offerings.
What Nokia does next with Windows 8 and future products is "crucial," according to a separate statement Friday from Fitch.
For now, the company seems headed toward "a precarious combination of a depleted cash balance without an end in sight to the declining cash flows," Fitch wrote. "Although the cost-cutting provides some relief, ultimately the company needs to demonstrate that its products are attractive to consumers and can enable it to win back market share."
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Moody's downgrades Nokia to junk status - AP - msnbc.com
HELSINKI — Moody's ratings agency on Friday downgraded Nokia's debt grade to junk status, citing greater than anticipated pressure on the struggling cellphone maker's earnings after it announced plans for major cuts and global layoffs. It kept the outlook negative, meaning it could downgrade it again.
The agency lowered the Finnish company's long-term senior unsecured ratings to Ba1 from Baa3, saying that Nokia's restructuring plan involved "drastically downsizing its infrastructure," an indication its problems were greater than expected.
Moody's said Nokia Corp.'s plans to focus "its direct marketing on fewer markets, streamlining support functions and reducing investments in certain R&D projects ... delineates a scale of earnings pressure and cash consumption that is larger than we had previously assumed."
The agency's downgrade — the second in two months — came after Nokia stock plunged 18 percent on Thursday following its announcement to close production and research plants, with 10,000 job cuts by the end of 2013. Nokia also sounded pessimistic about its outlook, saying that heavy competition would continue to hit its smartphone sector in the second and third quarters more than previously expected.
The measures were aimed at additional cost savings of €1.6 billion ($2 billion) by the end of next year, in addition to last year's announced plans to cut 10,000 jobs to save €1 billion by 2013.
Despite the latest downgrade, Nokia shares were up 4 percent at €1.91 ($2.41) in afternoon trading after falling to their lowest level ever in Helsinki on Thursday.
Moody's, which previously lowered the cellphone maker's debt rate on April 16, said that despite its decision on Friday, it considers " Nokia's commitment to decisive restructuring as positive and necessary to return the group to profitability."
"A return to profitability also depends on Nokia successfully transitioning its range of smartphones to the new Windows operating system and stabilizing its feature phone business," Moody's said.
Nokia has been fighting fierce competition from Apple Inc.'s iPhone and other makers using Google Inc.'s popular Android software, including Samsung Electronics Co. and HTC of Taiwan, and is also being squeezed in the low-end by Asian manufacturers making cheaper phones, such as China's ZTE.
The former bellwether of the mobile industry had one of its worst results in the first quarter with a €929 million net loss as sales plunged, especially in the smartphone market. In 2011, it was still the world's top cellphone maker with annual unit sales of some 419 million devices, but in the last quarter of the year posted a net loss of €1.07 billion, a marked reverse from the 745 million profit a year earlier.
Having held the top spot for 14 years, with a 40 percent market share in 2008, Nokia seemed to have run out of steam.
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It had hoped to remedy the situation with the new Windows Phone 7, launched in October, eight months after CEO Stephen Elop announced a partnership with Microsoft Corp. and has launched several versions of the Windows-based Lumia phones, including cheaper models for Asian markets.
"For Nokia to return to growth in this segment, it will primarily require the Lumia smartphones, which are selling in several versions and many markets, to gain traction in the smartphone market," Moody's said. "Indeed, in Moody's view, the attractiveness of the Lumia range should be boosted by the introduction of the Windows 8 operating system for mobile devices, to be launched in the second half of 2012."
Bucking the trend, two Wall Street analysts on Friday upgraded Nokia.
Oppenheimer analyst Ittai Kidron upgraded the company to "Perform" from "Underperform," saying that the cuts will buy Nokia some time, but its long-term success will depend on new products like the Windows 8 phones — and he can't predict how that phone will fare. He said 2012 will be tough, but 2013 is an "unknown path."
Citi analyst Zahid Hussein also upgraded the company to "Neutral" from "Sell," calling the company's moves "painful but necessary." He said that if Nokia can successfully cut costs, it could return to break-even as early as the third quarter of 2012, quicker than expected.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
T-Mobile getting some QWERTY love via Samsung SGH-T699 - Phones Review
As smartphones have advanced in recent years the focus has mainly been on larger touchscreen displays with their virtual keyboards, but some consumers still like to own a device that features physical keys, and today we can tell you that T-Mobile is set for some QWERTY love via the upcoming Samsung SGH-T699.
There has been some speculation for a while that a handset would be arriving on the T-Mobile network that featured a full QWERTY keyboard, and now the team over at TmoNews has managed to get hold of an image of the upcoming handset. There has been talk of a handset going under the model number before, and there was speculation it could be the Samsung Galaxy Nexus, which was more based on hopes and dreams more than anything else.
Now following the leak of an image that can be seen above it is now known what the SGH-T699 will look like. As you can see it features a physical QWERTY keyboard but other details of the handsets specifications are rather sketchy. It is known the upcoming Samsung mobile phone will feature a five megapixel camera on the back, and there will be a front facing shooter for video calls along with an LED notification light as well.
Not much else is known except there is a Qualcomm Snapdragon processor hiding inside, but it is not known if it will be the S3 or S4 unit, and it will be coming with the Android Ice Cream Sandwich operating system version 4.0.4 straight from the off. It may not be the high end QWERTY handset that many would have hoped for, but it seems those days have long gone.
Do you prefer to have a smartphone with a physical QWERTY keyboard?
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