Samsung snatches handset crown from Nokia as S&P cuts rating

Samsung has overtaken Nokia to become the world's biggest vendor of mobile phones. This move sees the Finnish company lose its position as global leader ending a 14-year run, according to multiple analyst reports.

IHS isuppli handset shipments first quarter 2012

Click here for figures from IHS.

The South Korean company shipped 93.5 million handsets in the first quarter, an impressive 36 per cent higher than the 68.9 million it shipped in the year-ago, according to Startegy Analytics. Nokia shipped 82.7 million units in the first quarter.

The ranking and changing of the guard is complicated by the fact that Samsung no longer reveals quarterly handset shipments, forcing research firms to extrapolate and estimate how many units Samsung moved in the quarter. However, according to Strategy Analytics, ABI Research and IHS iSuppli, Samsung overtook Nokia.

Commenting on Nokia, Neil Mawston, executive director of Strategy Analytics, said: "Volumes were squeezed at both ends, as low-end feature phone shipments in emerging markets stalled and high-end Microsoft Lumia smartphones were unable to offset the rapid decline of Nokia's legacy Symbian business. Nokia was the world's largest handset vendor between 1998 and 2011, for 14 years, before finally yielding top position to rival Samsung this quarter."

To make Nokia's day even worse, credit rating agency Standard & Poor's lowered the company's credit rating following a 29 per cent fall in sales at its Devices and Services division in the first quarter of 2012, according to Reuters. Samsung, meanwhile, exceeded analysts' estimates by posting first-quarter net income of $4.5 billion.

S&P said the rationale behind it lowering Nokia's corporate credit ratings from BBB- to BB+ was its view that the company's Devices and Services division could decline in 2012 by the same extent as in 2011, which was negative 18 per cent. The ratings cut was preceded by similar ones from Moody's Investor Service and Fitch.

Importantly, S&P still expects revenue from Nokia's Lumia smartphones to grow over time but not sufficiently to offset a rapid decline in revenue from Symbian-based smartphones over the next few quarters. While recognising Nokia's intent to launch new low-end products, S&P cautioned that the company's competitive position in India and China is under threat from other manufacturers.

On a slightly brighter note, the ratings agency noted that Nokia's smartphone revenues in absolute terms could start rising by the end of 2012, contributing to a stabilisation of revenues in the Devices and Services division toward the end of 2012 or the beginning of 2013.

Separately, Nokia's incoming chairman Risto Siilasmaa is said to have purchased 200,000 shares in the company.

For more:
- see this Bloomberg article
- see this Reuters article
- see this separate Reuters article
- see this Strategy Analytics release

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Nokia must take radical steps to stop its continued decline
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