Moody’s rating agency has downgraded the credit rating of the Finnish telecommunications group NOKIA to Ba1, saying its outlook remained negative.
On Friday, the rating agency brought down the credit rating of the Finnish telecommunications giant by one notch and placed it in the “Ba1” level from the previous “Baa3.”
"Today's rating action reflects our view that Nokia's far-reaching restructuring plan ... delineates a scale of earnings pressure and cash consumption that is larger than we had previously assumed," Wolfgang Draack, senior vice president at Moody’s was quoted as saying in a statement.
Moody’s still appreciated Nokia’s decision to take on a drastic restructuring of its operations as “a positive and necessary step to return the group to profitability.”
"A return to profitability also depends on Nokia successfully transitioning its range of smart phones to the new Windows operating system and stabilizing its feature phone business," the statement added.
On Thursday Nokia’s authorities made public their new plans to cut at least 10,000 jobs as part of their “deep additional cost-cutting measures” both in Finland and elsewhere.
The telecommunication giant’s chief executive Stephen Elop said in a statement that the company’s “planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia’s long-term competitive strength.”
Following the gloomy news of the planned job cuts and the new downgrade, the Helsinki stock exchange witnessed a sharp plunge in the share price of the company by 16 percent.
The cellphone manufacturer giant that has recently lost its 16-year number one ranking in the world-wide cellphone market has been implementing a major restructuring for over a year.
Nokia has announced that it would implement an additional USD 2.0 billion in its cost-cuttings by the end of the year 2013.