Standard & Poor's Ratings Service may lower Nokia's (NYSE:NOK) credit rating, which would be the first cut ever for the company and is the latest bit of dispiriting news to befall the world's largest handset maker.
S&P put Nokia on watch for a downgrade because of Nokia's declining smartphone market share. "A one-notch downgrade appears likely at this stage," analysts Matthias Raab and Patrice Cochelin wrote in the report. Nokia has maintained an "A" credit rating with the S&P, the sixth-highest of 10 ratings, since 1998.
Nokia CEO Stephen Elop said last week that the company faces significant competitive challenges, and vowed to outline Nokia's strategy for 2011 at the company's investor conference in London Feb. 11. Nokia has maintained that Symbian will be its mainstream platform of choice for most of its smartphones, and that it will introduce this year high-end devices running the MeeGo platform, which it developed with Intel.
However, Elop ignited speculation about the company's smartphone plans by saying that Nokia needs to "build, catalyze or join a competitive ecosystem," though he did not give any specifics or name any companies. The analysts at S&P said they will conclude their review after Elop unveils the company's strategy.
Nokia's fourth-quarter profit sunk 21 percent and its global handset market share dipped to 31 percent, down from 35 percent in the year-ago period. The company did have some bright spots to point to on smartphones: Nokia's smartphone shipments reached 28.3 million units in the fourth quarter, up 36 percent year-over-year, indicating strong sales of devices like the N8 and C7 Symbian smartphones. However, Nokia's smartphone market share dipped to 31 percent, down from 40 percent in the fourth quarter of 2009.
Underscoring the changing landscape, analysts at Canalys reported that Google's (NASDAQ:GOOG) Android platform surpassed Symbian device shipments for the first time in the fourth quarter--thereby making Android the most widely used smartphone operating system in the world.
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