Nokia Oyj is rapidly eroding its cash reserves, with some analysts suggesting the Finnish phone maker may be at risk of defaulting on bond repayments if it is unable to steady its financial affairs, a recent poll of bankers and brokerages revealed.
The past five financial quarters have seen the fading mobile telecoms giant use over €2 billion of its stockpiled cash, a rate that bolder analysts say could wipe out the company's entire €4.9 billion buffer by as early as next year.
"In our opinion, the company's ability to repay even its shorter-term 2014 bond could be an issue," said Societe General credit analyst Juliano Torii
However, a Nokia representative said the company was actively formulating a plan to lower costs and improve cash flow.
"Nokia is implementing a decisive action plan to position our company for future growth and success," spokesman James Etheridge said.
Despite being widely credited with pioneering the smartphone concept with its Communicator series, which launched in the late-90s, Nokia has failed to keep up with the fast pace of innovation set by rivals like Samsung and Apple.
The company recently changed operating systems in a bid to revive its fortunes, finally turning its back on Symbian and forming a new relationship with Microsoft.
"Nokia's Lumia was an attempt to catch up, but it was simply too little too late," said Nancy Utterback, credit strategist at Aviva Investors.
"I would not rule out the possibility of Nokia being downgraded further. The company is in a negative spiral that will be hard to reverse," she added.