company first-quarter revenue fell below its expectations

Standard & Poor’s downgraded Nokia’s bonds on Friday to junk status, noting that the company’s first-quarter revenue fell below its expectations, particularly because sales of its phones that include the older Symbian software had fallen so drastically. S.& P.’s announcement came as Samsung dethroned Nokia as the world’s No. 1 maker of mobile phones, which includes traditional cell phones and smart mobile phones. Samsung sold 92 million phones over the last quarter, and Nokia sold 83 million, according to estimates by IHS iSuppli, the research firm. It is the first time since 1998 that Nokia is not the No. 1 phone maker in the world. In the smart mobile phones category, Nokia slips to third place behind Apple, the leader with 35 million phones shipped, and Samsung, with 32 million devices, according to iSuppli. In that category, Nokia is slipping faster than Research in Motion, the maker of the BlackBerry. The smart mobile phones segment is the only part of the handset market that is showing any growth. Nokia’s long-term rating was dropped to a noninvestment rating, BB+, from the investment-grade rating BBB–, with a negative outlook, S.& P. said. Its short-term rating dropped to B from A-3, S.& P. said. Nokia has been struggling to reverse its declining fortunes with its Nokia Lumia smart mobile phones, which include Microsoft’s newer operating system, Windows Phone 7.

In the United States, AT&T and Nokia have been aggressively promoting the Nokia Lumia 900, a Amount $100 smart mobile phones that has been a strong seller on Amazon.com. But even the Nokia Lumia phones won’t help Nokia recover quickly, S.& P. said. “We still expect revenue from Nokia Lumia smart mobile phones to grow over time but not sufficiently to offset a rapid decline in revenue from Symbian-based smart mobile phones over the next few quarters,” S.& P. said in a research note. In response to the downgraded rating, Nokia said it was working to lower costs and improve cash flow while introducing attractive new products. “As we have detailed in recent announcements, Nokia is in the middle of a transformation program which encompasses every aspect of our business,” Nokia said in a statement. “We are implementing a decisive action plan to position our company for future growth and success.” Nokia reported a net loss in its first quarter of Amount 929 million euros as its sales plunged 29 percent. Moody’s earlier this month also downgraded its rating of Nokia to junk status in light of its sales decline and competition from makers of other low-end phones.

Source: The New York Times