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Nokia Gets No Respect: Downgraded Again

"I'll tell you how I made a small fortune in the phone business. I started out with a large fortune. [Rim shot.] I don't get no respect, I'm telling you."

Nokia (NYSE: NOK  ) is fast becoming the Rodney Dangerfield of mobile-phone manufacturers. First, Moody's piles a downgrade on top of the company the Monday after a horrible week that saw -- for starters -- Nokia endure an embarrassingly flawed launch of its flagship LTE-capable Lumia 900 smartphone on AT&T's (NYSE: T  ) network. The company followed that up by having to warn investors of less-than-stellar profits ahead of its earnings release.

Moody's then got around to dissing Nokia's credit rating on its short- and long-term debt to just one notch above junk territory, and that was before the official Q1 results -- a loss of $1.2 billion on sales that fell 29% from the same period last year.

Now it's Fitch's turn. That credit-ratings agency has downgraded Nokia's senior unsecured notes to "below investment grade," Fitch analyst Owen Fenton told Tech Crunch. "Nokia's profile is no longer commensurate with an investment grade rating," according to Fenton.

A concerned Nokia responded with a statement it hopes will inspire at least some confidence looking ahead. CFO Timo Ihamuotila wrote: "We are quickly taking action to position Nokia for future growth and success. Nokia will continue to increase its focus on lowering the company's cost structure, improving cash flow and maintaining a strong financial position."

Nokia's partnering with Microsoft (Nasdaq: MSFT  ) to bring in a third mobile ecosystem running the Windows Phone OS to compete with the success of Apple's iPhone and the gaggle of phones that run Google's Android OS, held much promise when that venture was announced last year.

That promise has not been dashed, but it's not getting much respect from at least one entity: "Fitch is currently not convinced that Nokia can attain this [a strong financial position] over the course of 18 months."

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Fool contributor Dan Radovsky owns shares in Nokia and AT&T. The Motley Fool owns shares of Microsoft, Google, and Apple. Motley Fool newsletter services have recommended buying shares of Nokia, Apple, Google, and Microsoft and creating bull call spread positions in Apple and Microsoft. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 25, 2012, at 1:09 AM, jdwelch62 wrote:

    Wow. Smells like a buying opportunity to me...

  • Report this Comment On April 25, 2012, at 2:06 PM, radarthreat wrote:

    Does anybody listen to what Moody's, Fitch, S&P et al. say anymore? They blew pretty much any credibility they had back in '08.

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