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Nokia's Outlook Looks Pretty Grim
April 8, 2011 12:04 PM
OUTLOOK NOT SO GOOD
I'd hate to
run into CEO Stephen Elop
Living up to its name, bond ratings firm Moody's turned a gloomy eye toward Nokia's future as it downgraded its rating on the company's debt. Shaking the proverbial Magic 8-Ball, Moody's considers Nokia's outlook not so good.
In a statement, Moody's analyst Wolfgang Draack said, "The rating downgrade primarily reflects Nokia's weakened market position in its core business, mobile devices, which has reduced the company's margins and funds from operations."
The firm also predicts shakier months ahead as Nokia adopts the Windows Phone 7 platform. The company's best case scenario has a new Windows Phone model released by late this year. Moody's labels 2011 and 2012 as Nokia's "transition years."
On top of that, Moody's reduced its ratings outlook for Nokia to negative -- on the assumption that the company can merely maintain a cash-flow-neutral position. Only the explosive growth of the smartphone industry and a relatively strong balance sheet kept Moody's from lowering Nokia's rating any further.
However, this reduction follows Gartner's
even grimmer outlook
for Nokia and its Symbian platform. The market researcher saw Symbian not only falling to Apple, Google, Research in Motion, and Microsoft, but also vaporizing to a minuscule 0.1% worldwide market share by 2015.
And who could forget Stephen Elop's "burning platform" metaphor in February? When the CEO can barely believe in his company, well, that doesn't bode well at all.
Although Microsoft is expected to
spot its partner billions of dollars
in the coming years -- given Nokia's utter lack of a promising future -- that could just end up being a drop in the outhouse bucket.
Will Apple Fall to Windows Phone 7 in Four Years?
Facing Apple and Google's Success, Nokia CEO Goes Rogue
For an investment angle on these and many more tech stocks, take a
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by Sean Udall.
No positions in stocks mentioned.
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