S&P further downgrades Nokia after NSN purchase

Jul 05, 2013 by Matti Huuhtanen

Ratings agency Standard and Poor's on Friday downgraded Nokia Corp.'s credit rating, citing the deal this week to buy out Siemens from its Nokia Siemens Networks joint venture for 1.7 billion euros ($2.21 billion).

The agency lowered the Finland-based company's long-term corporate credit rating to B+ from BB-, warning that its strong balance sheet will weaken as a result of the acquisition.

S&P also affirmed Nokia's B short-term corporate credit rating, with a stable outlook, and cut the issue rating on Nokia's senior unsecured debt to B+ from BB-.

"The ratings reflect our revised assessment of Nokia's financial risk profile assessment to 'aggressive' from 'significant,'" the agency said. "We continue to assess its business risk profile as 'weak.'"

Nokia said it believes the deal to buy out Siemens, to be completed during the current quarter, added value to the company.

"With a strong positive gross and net cash position, Nokia was able to take advantage of an opportunity to fully own Nokia Siemens Networks and, we believe, create meaningful value for Nokia shareholders," CFO Timo Ihamuotila said. "We will continue to prudently manage our cash resources post-transaction."

On Monday, Nokia announced its intention to purchase Siemens' half of the 2007 , in a move to help bolster its struggling smartphone division.

The networks operation had been lossmaking for several years amid speculation and rumors that it was an acquisition target but recently had shown signs of improvement after restructuring and substantial job cuts.

Nokia stock was down 2 percent at 3.10 euros in early afternoon trading in Helsinki.

Explore further: WellPoint 2Q tops Wall Street expectations

not rated yet
add to favorites email to friend print save as pdf

Related Stories

Nokia buys network operations from Siemens (Update)

Jul 01, 2013

Nokia is turning to the stronger-performing parts of its business to help bolster its struggling smartphone arm, as it offered Siemens 1.7 billion euros ($2.22 billion) for its half of the networks joint venture.

Nokia to delist from Frankfurt exchange

Nov 24, 2011

Nokia Corp. has applied to delist from the Frankfurt Stock Exchange because of falling trading volumes of its shares, the world's largest mobile phone maker said Thursday.

Nokia Siemens to lay off 17,000 worldwide

Nov 23, 2011

(AP) -- Nokia Siemens Networks is slashing 17,000 jobs worldwide by 2013 - nearly 23 percent of its work force - as it strives to cut costs by euro1 billion ($1.35 billion).

Moody's downgrades Nokia credit rating, outlook negative

Jul 23, 2012

International ratings agency Moody's on Monday downgraded the long-term debt of Nokia by two notches, to "Ba3", cautioning the Finnish mobile phone giant would likely suffer even deeper than expected losses ...

Struggling Nokia sells headquarters building

Dec 04, 2012

Nokia Corp. plans to sell its head office near the Finnish capital to real estate investors for €170 million ($220 million) as the struggling cellphone maker continues to cut costs.

Recommended for you

Why let your sales force influence product prices?

9 hours ago

From the outside, you might not notice the ongoing tension within many large businesses: the battle between salespeople, on the one hand, and marketers and product managers, on the other. Because the salespeople ...

User comments : 0