Fitch cuts Nokia to junk, outlook negative

Helsinki Fitch Ratings downgraded its credit rating on Nokia to junk status and said the outlook remained negative, as the Finnish handset maker's dwindling market share starts to strain its cash position.

Shares in Nokia, which were hit badly this month by a profit warning, fell 2 per cent to a new 15-year low of €2.654 after the downgrade.

Fitch cut its rating on Nokia — already downgraded in recent weeks by Standard & Poor's and Moody's — to BB+ from BBB- and said this could be lowered further unless the company's business showed improvements over the second half of 2012 and in 2013.

"Given the potential headwinds facing the company, Fitch is currently not convinced that Nokia can attain this over the course of 18 months," it said in a statement.

Nokia defended its financial position in a separate statement, citing its net cash position of €4.9 billion (Dh24 billion) as of end-March.

"Nokia will continue to increase its focus on lowering the company's cost structure, improving cash flow and maintaining a strong financial position," Chief Financial Officer Timo Ihamuotila said.

Fitch, however, said Nokia's cash could be depleted over the next 18 months by substantial restructuring charges and potentially negative operating cash flow.

Nokia — which has issued two eurobonds worth in total €1.75 billion and two dollar bonds worth $1.5 billion (Dh5.5 billion) in total — has struggled in recent years to keep up with Apple Inc and Google Inc in the smartphone business.