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By Emily Gosden: 3:03PM BST 18 May 2012 The Telegraph
Nokia 'could exhaust cash reserves next year'
<a href="http://s1267.photobucket.com/albums/jj559/365Wildfire/?action=view&current=nokia_2152206c.jpg" target="_blank"><img src="http://i1267.photobucket.com/albums/jj559/365Wildfire/nokia_2152206c.jpg" border="0" alt="Photobucket"></a>
The Finnish company is draining its €4.9bn (£3.9bn) cash buffer at an unsustainable rate and could be at risk of
default if it does not halt the pace, they said.
Nokia, once the market-leader, has struggled against competition from smartphone manufacturers such as Apple
and Samsung. Its cash pile has been eroded by €2.1bn in the past five quarters, and now stands at less than half
the amount on hand in 2007.
Consensus analysts’ forecast sees the company using up a further €2bn in just three quarters, finishing 2012
with €2.8bn, according to a Reuters poll of 30 banks and brokerages.
The warning follows Nokia’s downgrade to “sell” by Societe Generale analysts, who said that if handset sales
continued to fall substantially, it “could be enough to burn through most of Nokia’s existing cash pile and even
bring into question Nokia’s very survival”.
Nokia saw its credit rating downgraded to 'junk’ by Fitch and S&P last month. It has two bond issues outstanding,
the first being €1.25bn of 5.5pc bonds maturing in 2014.
Societe Generale analyst Juliano Torii said: “The company’s ability to repay even its shorter-term 2014 bond could
be an issue.”
Nokia booked a €1.34bn quarterly loss in its most recent results in April, hit by costs in its loss-making subsidiary
Nokia Siemens Networks, which produces telecoms infrastructure.
Its attempts to turn around its core handset business though its Lumia product have so far also disappointed
analysts, with sales lower than had been hoped for.
Nokia 'could exhaust cash reserves next year'
<a href="http://s1267.photobucket.com/albums/jj559/365Wildfire/?action=view&current=nokia_2152206c.jpg" target="_blank"><img src="http://i1267.photobucket.com/albums/jj559/365Wildfire/nokia_2152206c.jpg" border="0" alt="Photobucket"></a>
The Finnish company is draining its €4.9bn (£3.9bn) cash buffer at an unsustainable rate and could be at risk of
default if it does not halt the pace, they said.
Nokia, once the market-leader, has struggled against competition from smartphone manufacturers such as Apple
and Samsung. Its cash pile has been eroded by €2.1bn in the past five quarters, and now stands at less than half
the amount on hand in 2007.
Consensus analysts’ forecast sees the company using up a further €2bn in just three quarters, finishing 2012
with €2.8bn, according to a Reuters poll of 30 banks and brokerages.
The warning follows Nokia’s downgrade to “sell” by Societe Generale analysts, who said that if handset sales
continued to fall substantially, it “could be enough to burn through most of Nokia’s existing cash pile and even
bring into question Nokia’s very survival”.
Nokia saw its credit rating downgraded to 'junk’ by Fitch and S&P last month. It has two bond issues outstanding,
the first being €1.25bn of 5.5pc bonds maturing in 2014.
Societe Generale analyst Juliano Torii said: “The company’s ability to repay even its shorter-term 2014 bond could
be an issue.”
Nokia booked a €1.34bn quarterly loss in its most recent results in April, hit by costs in its loss-making subsidiary
Nokia Siemens Networks, which produces telecoms infrastructure.
Its attempts to turn around its core handset business though its Lumia product have so far also disappointed
analysts, with sales lower than had been hoped for.
