Nokia slumps further with debt converted to junk

By Rizza Sta. Ana

Aug 23, 2013 07:43 AM EDT

Moody's Investor Service had downgraded Nokia Oyj's corporate family rating to a negative outlook yesterday. In a released statement, the Finland smartphone maker had caused the downgrade when it bought partner Siemens AG out in the Nokia Siemens network-equipment business for EUR1.7 billion or USD2.3 billion. Nokia's corporate family rating is now at B1, or four levels below investment grade.

Moody analyst for Nokia Roberto Pozzi spoke on the credit rating, and said, "We believe that the company continues to face challenges returning to sustainable profitability in its core smartphone and mobile-phone operations...It is unlikely to reach break-even on a cash flow basis before well into 2014, at the 

On the other hand, Moody's said that the buyout seemed to be a profitable move for Nokia to stabilize its company's financial disposition. "We are pleased that the strong cash position we have maintained throughout our transition has enabled us to take advantage of an opportunity to acquire full ownership of NSN (Nokia Siemens Network), whose financial performance has strengthened markedly in recent quarters," Nokia's Chief Financial Officer, Timo Ihamuotila, said in a statement. 

Nokia experienced a 3.4% increase in the Helsinki bourse yesterday. The company shares had risen in a median 4.7% this year. 

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