Fitch has downgraded Nokia's credit rating to junk because of the manufacturer's poor first quarter results.
It is the second credit agency in just over a week to have cut Nokia's rating. Fitch said Nokia needs to stabilise its falling sales, and show it can generate low-single digit operating profit margins in order to regain its rating, but warned it is not confident that the manufacturer will be able to do so over the next 18 months.
While it said forthcoming Nokia Lumia devices could help its credit profile in the coming months, it could be hit by 'further dramatic declines' in its low-end smartphone and feature phone business, further losses at Nokia Siemens Networks, or a failure of the Lumia devices to catch on with the public.
In response, Nokia CFO Timo Ihamuotila said: 'We are quickly taking action to position Nokia for future growth and success. Nokia will continue to increase its focus on lowering the company's cost structure, improving cashflow and maintaining a strong financial position.'
Ihamuotila posted a similar statement when Moody's downgraded Nokia's credit rating last week to near junk status. Last Thursday (19 April), Nokia posted a €219m loss in its phones division for the first quarter of 2012.
Editor: Graeme Neill