July 24, 2012- Moody’s, the international ratings agency downgraded Nokia’s long term debt on Monday. The downgrade was for two notches taking it to Ba3. The agency cautioned that the mobile phone giant from Finland would likely be hit by even deeper losses than first expected moving forward.
The transition taking place by Nokia in the smartphone industry, said Moody’s, would cause deeper losses and consumption of cash in the next quarters. The agency said the outlook for all of Nokia’s ratings was negative.
In June, Nokia had been moved by Moody’s to junk status, only two months after two other ratings agencies, Fitch and Standard & Poor’s. However, the lowering of the rating to Ba3 places the mobile phone manufacturer four full notches below an investment grade.
Last Thursday, Nokia reported much worse second quarter results than were expected. The company posted a loss of $1.74 billion, about four times more than its loss in the same quarter one year ago and double the loss that was expected by industry analysts.
Nokia recently was overtaken as the world’s large manufacturer of mobile phones after holding that title for 14 years. It changed its corporate strategy dramatically about 18 months ago, as it phased out its Symbian phones to enter into a partnership with software giant Microsoft.