The short-term outlook for Nokia is getting dimmer by the minute. Nearly two months after downgrading Nokia’s stock to BBB-, Standard and Poor’s has cut the stock outlook again, this time all the way down to junk status. S&P is the second firm to rate Nokia’s stock to junk status, with Fitch giving Nokia the rating just a few days back.
S&P’s decision forecasts a tough year ahead for Nokia, as sales of devices based on its Symbian platform are largely expected to decline, offsetting much of the gains they will likely make with Windows Phone in 2012. For the next few quarters at least, the S&P expects that the Lumia line will not be enough to outshine the rapid decline of Symbian, even if the Lumia line performs as well as expected.
In response to the S&P downgrade, Nokia issued the following statement:
“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 cash balances remain strong, with over €9.8 billion in gross cash balances on hand. Though Nokia concedes that 2012 will be a tough year for the company, they fully expect their huge bet on Windows Phone to pay off once Windows Phone 8 devices start coming to market later this year. Meanwhile, the S&P states that if Nokia’s struggles continue after the next few quarters, further downgrades would likely be issued.
[via The Wall Street Journal, The Verge, Nokia]