Nokia's debt is downgraded by Moody's

FINNISH PHONE FIRM Nokia's debt was rated at a level just above junk status by Moody's after the credit rating agency downgraded it today.

Moody's said in a global credit research release that Nokia's outlook was negative while cutting its senior debt from a corporate bond rating of Baa2 to Baa3 due to a "severe decline" in Nokia's mobile phone sales and revenue in the first quarter.

The Moody's statement said, "While volatility by quarters is not uncommon, Moody's believes that the structural challenges facing Nokia's mobile phones segment may not be easy to address."

The news follows an unexpected profit warning by Nokia last week as the firm's Windows Phone strategy continues to struggle against Apple's Iphone and devices running Google's Android operating system. Coming in well below analysts' expectations, Nokia managed to shift an unimpressive two million units in the first quarter. In comparison, Android vendors manage to sell a similar number of devices about every three days.

Moody's statement continued, "Nokia's transition in its smart devices from Symbian-based phones to the Windows-based Lumia devices is proving more challenging than expected given that sales of Symbian-based devices are falling off very quickly while Lumia sales are only ramping up slowly."

Nokia can now only hope that its latest flagship handset, the Lumia 900 will sell well enough to keep its debt from falling further down the ratings scale to junk level while the firm tries to break back into the US market. µ