Moody's downgrades Nokia debt

Moody's rating agency downgraded long-term debt issued by mobile-telephone maker Nokia by two notches on Wednesday, citing a severe weakening of the group's market position. Moody's also said that it was giving the new rating a negative outlook, meaning that it might lower it further. A senior analyst at Moody's, Wolfgang Draack, said that the agency had taken its decision because of a fall in the competitive position of Nokia smartphones using the group's Symbian platform. Nokia, the leading maker of mobile telephone handsets, announced in February that it was tying up with Microsoft to use the latter's operating system instead of Symbian, which until then had been installed in Nokia devices. Moody's said that on this basis it had worked out two outlooks for Nokia, since the decision would affect the group's results. The first outlook, more conservative than Nokia's own estimate, held that the third quarter of this year would mark a low point for the firm. In that event, the new notation of "Baa2", from "A3" previously, would be maintained. Under this outlook, the volume and value of sales of mobile handsets would be relatively steady compared with the level in the second quarter, and sales would improve towards the end of 2012. This would not prevent a 20-percent fall of sales in 2011, Moody's estimated. Under the second more negative outlook, the group would not turn round a fall of sales which would amount to fewer than 65 million mobile phones and fewer than 15 million smartphones being sold per quarter. This would cause a "modest" operating loss and would put the credit rating under pressure. Last week Nokia reported a net loss for the second time since it became the leader in its market in 1998, but said that its recovery strategy with Microsoft was going in the right direction. In the second quarter, it made an unexpectedly big loss of 368 million euros ($534 million) from a net profit of 227 million euros 12 months earlier.