US ratings agency Moody's has lowered the credit status of Finnish phone maker Nokia to junk. It's now reached a speculative level as the company's business outlook remains negative despite reforms.
Moody's on Friday lowered its assessment of Nokia by one notch to the speculative level of Ba1, citing as a reason that the company's outlook remained negative.
"Today's rating action reflects our view that Nokia's far-reaching restructuring plan delineates a scale of earnings pressure and cash consumption that is larger than we had previously assumed," Moody's Senior Vice President Wolfgang Draack said in a statement.
Nokia, one of the world's biggest mobile-phone makers, had shocked markets on Thursday by announcing it would cut 10,000 jobs globally by the end of 2013 as a part of deep cost-cutting measures.
The company has been undergoing massive restructuring for over a year, but says it has to implement an additional 1.6 billion euros ($2 billion) in cost reductions, especially impacting its struggling Deices & Services unit.
"A return to profitability also depends on Nokia successfully transitioning its range of smartphones to the new Windows operating system," Moody's said in a statement.
The ratings agency identified some positive elements at the Finnish group, noting that despite a number of serious problems Nokia had maintained a strong liquidity position and capital structure.
hg/ncy (AFP, dpa)