Moody's changes Nokia's outlook to negative

NEW YORK, April 23 (Reuters) - Moody's Investors Service on Thursday changed its outlook on Nokia (NOK1V.HE) to negative from stable after the company last week released poor first-quarter earnings and a gloomy forecast for 2009.

Moody's rates Nokia at A1, or fifth-highest investment grade.

"The outlook change was triggered by Nokia's results for the first quarter 2009," said Eric de Bodard, the lead author of the report.

The results "confirmed a double-digit rate of decline for the mobile phone market in units and a one third year over year revenue reduction for Nokia in this segment," he said.

The world's largest maker of cellphones said on Thursday it was too early to say whether demand for handsets has bottomed out. For more click on [ID:nLN377368].

The cellphone market is facing its toughest year ever as the economic downturn saps demand.

Last week Nokia reported a 27 percent fall in January-March sales and its first-ever quarterly pretax loss while repeating its forecast for cellphone market volumes to decline by around 10 percent in 2009. For more, click on [ID:nLG183354].

While Nokia maintained its gross profit margin in devices, the company's group results of 5.5 percent fell below the agency's expectation of above 10 percent in the first quarter.

The agency said it is also concerned that more than just a weak market for mobile phone sales and network equipment in the global economic downturn is behind the sharp drop in sales.

"Moody's is concerned that the currently depressed mobile phone market may not only be a result of transitory, cyclical factors, but may also reflect a degree of market saturation in most regions," said Bodard.

The agency said Nokia's market saturation may hinder the company from achieving the fast revenue growth it experienced over the past few years.

Moody's said that such "a slow growth environment may not allow Nokia to return to credit metrics sustainable at a level that meets Moody's expectations for a A1 rating."

(Reporting by Tom Ryan, Editing by Chizu Nomiyama)