Moody's changes outlook for Nokia

Moody's changes Nokia's rating outlook on Microsoft deal and reaffirms its ratings

Associated Press

Moody's Investors Service on Thursday changed its outlook on Nokia to "Developing" from "Negative" and reaffirmed its ratings for the Finish cell phone company.

The move comes after Microsoft Corp. announced plans Monday to buy Nokia's cellphone unit for $7.2 billion.

The deal offers both companies a chance to make up for lost time with a strategy to meld their software and hardware into a cohesive package, like rival Apple has done. However, there are many skeptics who don't believe the two struggling companies will be able to pull it off successfully.

Moody's said that it sees the sale as a positive step for Nokia as it will eliminate a drag on profits and improve its business profile. The rating agency noted that the "Developing" status reflects the uncertainties in Nokia's long-term business strategy and capital structure.

The rating agency also affirmed the company's junk-grade "B1" corporate family rating.

Moody's said it left the company's credit rating unchanged because the Finnish company is currently conducting a strategic review of its three remaining businesses. It also is looking at how to use the proceeds from the Microsoft deal.

Assuming the deal is completed, Nokia's business in the future will be comprised of its telecoms equipment business, known as NSN, which it recently took control of from Siemens, as well as its mapping business and a new unit named Advanced Technologies, which has been set up to develop and monetize technology.

Moody's also upgraded the corporate family rating of Nokia Solutions and Networks B.V. — NSN — one notch in junk-grade status to B1 from B2. The agency said it believes that NSN will benefit from improved financial flexibility of its parent company if the Microsoft deal is completed.

Moody's also moved NSN's ratings outlook to "Developing" from "Positive" based on the pending deal.

Nokia's U.S.-traded stock rose 16 cents, a 3 percent gain, to $5.49 by early afternoon. Its stock has gained in value daily since the Microsoft deal was announced.

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