On Friday Standard and Poorâ€™s downgraded Nokiaâ€™s long-term corporate credit rating to BB+ from BBB- and its short-term corporate credit rating to B from A-3, the second downgrade after Fitch Ratings did the same earlier in the week.
â€œWe now expect Nokia to report significantly lower margins and cash flows in 2012 than we had previously expected,â€ S&P said. â€œThe outlook is negative, reflecting the possibility of a further downgrade if Nokia fails to stabilize revenues and margins and significantly cut its cash losses.â€
Timo Ihamuotila, Nokia’s Executive Vice President and CFO, responded in a press release, stating:
"As we have detailed in recent announcements, Nokia is in the middle of a transformation program which encompasses every aspect of our business. We are implementing a decisive action plan to position our company for future growth and success. The main focus of these actions is on lowering the company’s costs, improving cash flow and maintaining a strong financial position, while bringing attractive new products to market."
Nokia’s financial position remains strong. As of March 31, 2012, Nokia had gross cash balances of EUR 9.8 billion, and a net cash position of EUR 4.9 billion.
Nokia has been working at closing expensive and redundant manufacturing locations in Europe and elsewhere and has been increasing its investment in the far east, recently opening up a new factory employing 10,000 workers in Vietnam. While it is safe to say the company grossly underestimated how quickly buyers would abandon Symbian and possibly how quickly they would adopt Windows Phone , Nokia has so far stuck very closely and continues to exude confidence in their game plan, even if the credit agencies are not as convinced.