(Updates with analyst comment starting in third paragraph.)
June 9 (Bloomberg) -- Nokia Oyj, the world’s biggest maker of mobile phones by volume, had its credit rating cut for the second time this year by Standard & Poor’s on declining sales.
Nokia’s long-term credit rating was cut by one level to BBB+ from A- and the company was placed on CreditWatch negative, the London-based ratings company said in a statement today. The rating is three steps above junk-grade.
Nokia was cut to the lowest investment grade by Fitch Ratings on June 7. Espoo, Finland-based Nokia slashed its sales and profit forecasts on May 31, causing the stock to slump to its lowest price in 13 years. The CreditWatch is likely to be resolved within three months and the long-term rating will probably remain investment-grade, Standard & Poor’s said.
“Nokia will likely report significantly weaker operating results in 2011 than we had expected,” analysts including Matthias Raab in Frankfurt wrote in the statement. The “unexpected and significant sales and profit warning” caused Standard & Poor’s to reduce its sales estimates to a 10 percent decline in handset revenue.
Chief Executive Officer Stephen Elop is readying a line of phones based on Microsoft Corp.’s Windows Phone 7 operating system to replace the company’s own Symbian line, which is losing out to Apple Inc.’s iPhone and handsets based on Google Inc.’s Android operating system.
--Editors: Robert Valpuesta, Simon Thiel.
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