Nokia unfazed by S&P downgrade

Nokia's long-term marking rating has been downgraded for the first time by rating agency Standard & Poor's (S&P), but Nokia claims the downgrade acknowledges its strong points as well as its shortcomings.

S&P lowered the Finnish mobile manufacturer's rating from A, 'strong', to A-, 'satisfactory', citing expected market share losses in 2011 and 2012 as it shifts its smartphone business from the Symbian operating system to Microsoft's Windows Phone 7.

We spoke to a Nokia spokesperson, James Etheridge, about the downgrade. He dismissed it as “their own analysis” and pointed out a number of things that S&P highlighted about Nokia's business.

“We're pleased that S&P has noted the strength of Nokia's Mobile Phones business unit as well as our strong financial profile, robust liquidity position, and our commitment to maintaining a conservative capital structure,” he said.

When asked about the recent partnership with Microsoft, Etheridge told thinq_ that S&P "acknowledges the rationale for our proposed partnership with Microsoft in our Smart Devices unit, the balanced nature of the partnership, and the opportunities it provides for
Nokia's long-term success.”

We asked if Nokia believed the patent dispute with Apple had any bearing on the S&P's downgrade. Etheridge said Nokia's management does not expect the litigation with Apple, or any of the other companies Nokia has legal cases against, to have “a material adverse effect on our financial condition.”

"The dispute with Apple began because of their failure to agree appropriate terms to license Nokia's standards-essential patents, which they have been infringing since the launch of the iPhone in 2007,” Etheridge said. "Apple, through its use of Nokia patents without appropriate compensation, is seeking a free ride on the back of Nokia's significant innovation. Though litigation is always a last resort, we intend to pursue our claims against Apple to protect Nokia's interests."

Nokia's shares are down $0.02 so far today, to $6.14, a loss of 0.24 per cent. This is a minor slip, most likely due to the rating downgrade, but with some $7.5 billion in long-term debt, Nokia cannot afford to make any further slips.