Nokia has suffered yet another financial setback after credit agency Fitch downgraded its rating to junk on the basis of tough market conditions hurting the firm's strategy in several market areas.
The downgrade follows a similar report by agency Moody's which placed the firm at one level above junk, but Fitch said that while the Lumia range may offer some respite for the firm, it was unconvinced this was enough to stop the rot at the Finnish firm.
"The launch of the new Lumia phone with AT&T, and the potential launch of new Nokia products later in the year, could be positive for Nokia's credit profile. However, there are also numerous negative potential factors which could delay or fully impede a recovery," it said.
"These could come from further dramatic declines in Nokia's low-end smartphone and feature phone business, further losses at [Nokia Siemens Networks], or only partial success of the Lumia product range that does not compensate fully for the declines in the rest of the business."
Fitch said it will now closely monitor the company's future results to see if there is any return to positive growth, but warned a failure to do so would led to further negative action.
The firm's chief financial officer, Timo Ihamuotila, was forced to once again defend the firm's financial position.
"Nokia will continue to increase its focus on lowering the company's cost structure, improving cash flow and maintaining a strong financial position," he said.
The firm also repeated the fact it has cash holdings of €9.8bn of which almost €5bn is free cash-flow.
However, Fitch said this may not be enough to protect the firm for the coming months.
"Although this net cash position is currently strong, this could be depleted over the next 18 months by substantial restructuring charges and the potentially negative operating cash flow that could persist unless the company's operating performance improves," it said.
Nokia last week unveiled losses of €1.3bn after the firm's chief executive Stephen Elop was forced to admit that the Lumia range had not had the initial impact the firm had hoped.
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