April 12, 2012 / 8:42 AM / 8 years ago

TEXT-Fitch:Nokia's profit warning highlights challenge in its transition process

(The following statement was released by the rating agency)

Apr 12 - Fitch Ratings says that Nokia Corporation’s (‘BBB-‘/Negative) profit warning highlights the challenge the company is facing in improving its competitive position as it migrates to the new Windows Phone operating system.

Nokia’s H112 revenue and operating profit are likely to be even lower than Fitch’s current forecasts. Due to intense competition and a weak macroeconomic environment, Nokia has said that its non-IFRS Devices & Services operating margin in Q112 was approximately negative three percent, lower than previously expected, with Q212 expected to be similar to or below the Q112 level.

Fitch says Nokia needs to demonstrate that it can successfully and continuously refresh its suite of products with offerings that appeal to consumers in a competitive and fast-moving smartphone market. Nokia’s large cash balance (net cash of EUR4.9bn at the end Q112) buys it some time to demonstrate this turnaround, though Non-IFRS operating margins remaining negative through 2012 could further erode this cash cushion.

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