Nokia Suffers Setback - Analyst Blog


Nokia Corp. ( NOK ) has suffered a setback as Standard & Poor's Ratings Services (S&P) downgraded its credit rating. Currently, S&P rates Nokia as BBB-, which is the lowest rank of the rating agency's investment grade category. As per S&P, Nokia's partnership with Microsoft Corp. ( MSFT ) may help the company to strengthen its competitive position in the global smartphone market, but significant fall in demand for the company's legacy Symbian-based handsets will more than offset the positives of Windows Phone based smartphones.

Quarterly net revenue in the fourth quarter of 2011 was approximately $13,496.7 million, down 21% year over year. Smartdevices (including smartphones and tablets) revenue was $3,705.7 million, down 38% year over year. Mobile Feature Phone revenue was $4,101 million, down 23% year over year. Smartdevices average selling price ( ASP ) was $188.9, down 9% year over year. Mobile Feature Phone ASP was $43.2, down 24% year over year. In the fourth quarter of 2011, Nokia shipped 19.6 million smartdevices and 93.9 million Mobile Feature Phones, down 31% and 1% year over year, respectively.

Despite fairly good market traction for its Lumia series of Windows Phone-based smartphones, Nokia's top line fell primarily due to poor performance of its Symbian-based handsets compared with low-cost handsets from Samsung, LG, and HTC in the Asian markets. Furthermore, although technologically Lumia is a solid product, we are not very sure whether it will be able to gain market share from Apple Inc. ( AAPL ) developed iPhone or Google Inc. ( GOOG ) developed Android based smartphones in the most lucrative North American markets.

S&P assigned a negative outlook for Nokia, indicating a potential downgrade of Nokia's overall credit rating if operating margin in the company's devices and service business segment remain in the low-to-mid single digits or if the company's net cash position declines to below EUR2 billion.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ASP , GOOG , MSFT , NOK

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