Dallas, Texas 05/014/2014 (FINANCIALSTRENDS) –Nokia Corporation (ADR)(NYSE:NOK) got a vote of confidence from rating agency Moody’s Investors Service on 12th May. In an accompanying note to its investors, the analysts have explained why they have upgraded the rating on the now cash rich tech firm to a Ba2 from previous rating of B1. The agency has also increased the rating on the firm’s default possibility to a Ba2-PD from B1-PD.
These positive upgrades comes on the back of the Finnish firm turning the corner post the completion of its long drawn out sale of its hand set business to tech major Microsoft Corporation (NASDAQ:MSFT). Now the cash rich firm has announced a slew of measures under its new Chief Executive Officer, President and Chairman of the Group Leadership Team Rajeev Suri. These changes include a name change of the pared down business as Nokia Networks and has given effect to a slew of capital structure optimisation steps.
Moody’s Investors Service Vice President Roberto Pozzi who covers Nokia as Senior Analyst has been quoted to have said that, “We are upgrading Nokia’s ratings because Nokia announced that it will remain focused on its existing businesses and reduce gross debt, thus positively resolving the uncertainties reflected in the previous developing outlook on the rating. The upgrade also reflects our view that the performance of the company’s core Networks business will stabilise in the next 12-18 months”.
The rating agency goes on to predict that in spite of the increasing completion in the communication technology platform providing space, the cash rich firm will improve its capital structure and will enjoy a solid liquidity situation. It predicts that the revenue will go up in the single digits post these measures gaining effect and its operating margins which were under severe scrutiny by investors will improve going forward and would level out at entry level double digits in the next one year. These revenue gains are to be expected from the company monetizing its huge IP library.