As MMW covered in ample detail last week, struggling mobile phone maker Nokia has hit a significant rough patch.
Following Nokia’s announced plans to cut 10,000 jobs from its global workforce next year, Moody’s downgraded Nokia’s credit rating to “junk.” As of this writing, all three major credit rating agencies have now done the same.
“[Nokia’s plan] delineates a scale of earnings pressure and cash consumption that is larger than we had previously assumed,” said Wolfgang Draack, a senior VP at Moody’s.
Nokia’s stock plummeted nearly 20% on news of the employment cuts. Not surprisingly, the Moody’s downgrade didn’t help either.
“These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia’s long-term competitive strength,” Nokia Chief Executive Stephen Elop said Thursday. “We do not make plans that may impact our employees lightly, and as a company we will work tirelessly to ensure that those at risk are offered the support, options and advice necessary to find new opportunities.”
“We are increasing our focus on the products and services that our consumers value most while continuing to invest in the innovation that has always defined Nokia,” Elop added. “We intend to pursue an even more focused effort on Lumia, continued innovation around our feature phones, while placing increased emphasis on our location-based services. However, we must re-shape our operating model and ensure that we create a structure that can support our competitive ambitions.”
