Nokia Corp Credit Rating Upgrades from both Fitch and Moody's ...
Espoo, Finland: Nokia notes today's announcement from Moody's, upgrading Nokia's rating to Ba2 from B1.
Nokia announced the completion of the sale of substantially all of its Devices & Services business to Microsoft on April 25, 2014. After this, Nokia announced the appointment of Rajeev Suri as President and Chief Executive Officer for Nokia. Nokia also communicated its vision to be a leader in technologies important in a connected world and strategy to build on Nokia's three strong businesses in networks, location and technologies. In addition, Nokia published plans for a EUR 5 billion program to optimize its capital structure.
"Nokia is pleased to note Moody's positive reaction towards our recent announcements. We believe we have taken the first steps towards our long term target of becoming an investment grade company", said Timo Ihamuotila, Executive Vice President and Group Chief Financial Officer, Nokia.
>> Nokia's Credit Rating Upgraded by Fitch; 'Impressive Turnaround' Cited
John D. Stoll
The Wall Street Journal
May 13, 2014
online.wsj.com
Nokia Corp. received its second credit rating upgrade in as many days and moved closer to its goal of achieving investment grade, reflecting the positive view analysts have taken on the Finnish company following the sale of its tarnished handset business to Microsoft Corp.
Fitch Ratings on Tuesday upgraded Nokia's long-term debt rating to BB from BB-, citing stable cash flow and an "impressive" turnaround in the company's core wireless networks business. On Monday, Moody's Investors Services boosted Nokia's corporate family rating to Ba2 from B1, pointing to an improved capital structure and a refined strategy.
The company's new chief executive, Rajeev Suri, has said the company sees returning to investment grade as a key milestone. The three major credit ratings agencies, including S&P, have yet to move Nokia out of junk territory, however.
The upgrades follow a major overhaul at Nokia, which had reported a string of annual losses due to the weakness in its once-dominant mobile devices unit. The company closed its 5.4-billion-euro ($7.5 billion) sale of that unit to Microsoft in late April, and said it will distribute more than $4 billion to investors from proceeds of the sale.
Moody's said in a press release that while Nokia appears to have reduced its exposure to uncertainty, "the company's smaller scale and narrower business focus compared to industry leaders" is a factor constraining its rating. Additionally, volatility and cyclicality in the mobile networks industry is a concern.
Moody's said it wants to see Nokia establish a track record of strong free cash flow generation and performance. Fitch said Nokia's focus on patents and developing new technologies--in addition to wireless networks--will lower Nokia's exposure to volatility.
Nokia has said it will work to bolster its balance sheet by shaving EUR2 billion in interest-bearing debt by 2016.
Nokia will distribute EUR3 billion ($4.16 billion), representing more than half of the Microsoft proceeds, to investors. Nokia suspended its dividend last year as it scrambled to conserve cash. The payout includes an EUR800 million dividend for 2013 and 2014 and a separate one-time dividend of 26 euro cents a share, or about EUR1 billion. Nokia is also initiating a EUR1.25 billion share-repurchase program.
"I think this cash distribution leaves us with enough financial resources," Mr. Suri said in a recent interview. He also said Nokia's bigger cash pile puts it a position to consider smaller-size acquisitions to fill gaps in the product portfolio. ###
- Eric - |
