Standard & Poor’s Ratings Services have just change Nokia’s outlook from Stable to Negative, which is bad news for the Finnish company. This negative outlook shows a deterioration of the margins of Nokia’s Devices and Services segment.
This negative trend started at the end of 2008, just as the economic recession was kicking in, or so claims Matthias Raab from Standard & Poor. The new rating means that the future is also pretty dark for Nokia, as far as material improvement in profitability is concerned. Smartphone market competition is the reason to worry, specially as far as high end devices are concerned.
In June 2010, the group lowered the guidance for the full-year operating margin of the Devices & Services segment to under 11%-13% (the previous target) and now the operating margin is expected to be 9%-12% in Q2 2010. Nokia’s ratings are not all bad, specially considering positive factors like a solid cash position of EUR 5 billion and the leading position in the handset maker segment, plus great intellectual property.
Nokia’s ratings could be lowered even more in 2011…
[via cellular news]