Nokia shares downgraded to junk status – time for acquisition?

The Fitch Ratings agency has downgraded it’s credit rating on Nokia to junk status and say the outlook remains negative.

Shares of Nokia are down at a 15 year low at 2.654 Euros.

The statement from Fitch is pretty grim:

“Given the potential headwinds facing the company, Fitch is currently not convinced that Nokia can attain this over the course of 18 months,”

Here’s my take on Nokia’s troubles.

Nokia is in a big mess partially because they didn’t keep their eye on the ball and also because they have hitched their wagon to a company that is also in transition – Microsoft.

I don’t say this in a derogatory manner about Microsoft but it’s hard to assure ratings agencies that you know what you are doing when your long term strategy is partially dependent on another company that also has a lot going on.

While it is way too early to predict the death of the Nokia Lumia by a long shot, I can tell you that 18 months from now, people will not be talking about Nokia phones.

Whether it is deserved or not, the iPhone 5 and whatever new Android phone is the rage at the time will probably suck all the air out of that space.

If this was better planned, Nokia could have piggy backed on the release of Windows 8 to release new Windows Phone 8 models. That way, they could ride a potential wave of press that this new Operating System is going to generate for the next couple of years.

If I had to guess, I would bet that Nokia will be acquired by a third party sometime in the next 6 months.

Nokia still make solid phones and have a solid European market – in the right hands, they could do big things.

Time will tell.

Source: Reuters

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  • techblogger

    Maybe now Microsoft can take ownership.