Nokia Oyj’s debt, already at junk status at the three biggest rating companies, was cut an additional two steps at Moody’s Investors Service as the mobile- phone maker’s losses mount.
The long-term debt rating was cut to Ba1 from Ba3, three levels below investment grade status, Moody’s said Monday in a statement. Fitch Ratings cut Nokia’s rating deeper into junk last week after the Espoo, Finland-based phonemaker reported a wider second-quarter loss and said its handset business probably won’t be any closer to profitability this quarter.
“Nokia’s transition in the smartphone business will cause deeper operating losses and consequently cash consumption in the coming quarters than we had previously assumed,” Wolfgang Draack, a Moody’s analyst, said in the statement. Moody’s has a negative outlook on Nokia.
The company has announced more than 20,000 job cuts and shuttered production and research sites as it tries to offset a continuing decline in revenue. Chief Executive Officer Stephen Elop is betting on the Lumia smartphone running Microsoft Corp. software to halt gains by Apple Inc.’s iPhone and handsets using Google Inc.’s Android software.
Nokia’s shares fell as much as 4.2 percent and declined 3.2 percent to 1.38 euros at 3:47 p.m. Helsinki time, near the lowest level since 1994.
“While we are disappointed with Moody’s decision, its impact on the company is limited,” Timo Ihamuotila, Nokia’s chief financial officer, said in a separate statement. “Nokia will continue to focus on lowering the company’s cost structure rapidly, improving cash flow and maintaining a strong financial position.”
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