UPDATE: S&P downgrades Nokia (NOK) from BB+ to BB-, Outlook Negative

August 15, 2012 7:42 AM EDT
(Updated - August 15, 2012 7:45 AM EDT)

S&P downgrades Nokia (NYSE: NOK) from BB+ to BB-, Outlook Negative, saying they now anticipate net cash falling to less than €3 billion by year-end 2012, including cash restructuring outflows.

From S&P:
The rating actions reflect a downward revision of our estimates of revenues and profitability for Nokia's smartphone operations in 2012 and 2013. We have subsequently also revised our cash flow assumptions, including the impact from Nokia's restructuring of its Devices and Services division. In line with our criteria, we have therefore revised our assessment of Nokia's business risk
profile to "weak" from "fair" and that of the financial risk profile to "significant" from "intermediate".

We now assume that Nokia's smartphone operations will post lower revenues than we previously anticipated over the coming quarters. We also believe that consolidated revenues for 2012 will show a decline of 16%-19% and that the company will post a non-IFRS operating loss (that is, not under International Financial Reporting Standards) before restructuring costs.

Nokia's revenues could stabilize in 2013 if growth from Lumia smartphones is able to offset the revenue decline from smartphones using the Symbian operating system and, to a lesser extent, from mobile phones. However, we still foresee Nokia posting a low single-digit non-IFRS operating margin in 2013.

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