Moody's cuts Nokia credit rating, points to 'weakened market position'

Following a rating review initiated on January 28th, Moody’s on Thursday lowered Nokia’s senior debt rating from A2 to A3 and cut its short-term debt ratings from Prime-1 to Prime-2 with a negative outlook. Moody’s cites Nokia’s weakened position in the cell phone market and uncertainty surrounding the company’s upcoming transition to Microsoft’s Windows Phone platform as the reasoning behind the downgrades. “The rating downgrade primarily reflects Nokia’s weakened market position in its core business, mobile devices, which has reduced the company’s margins and funds from operations,” said Moody’s SVP and lead Nokia analyst Wolfgang Draack in a note. “In Moody’s view, the main reasons for this trend are: (i) an inflexible smartphone operating system; (ii) slow time-to-market for new models; (iii) more attractive innovation by smartphone competitors; and (iv) accelerating price competition for low-end phones.” The move follows Standard & Poor’s decision to downgrade Nokia’s credit rating last month, when it said it expects Nokia’s market share to continue to slide through this year and in 2012.

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