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Moody's: Nokia is junk

Moody's downgraded Nokia's credit rating to junk status on Friday afternoon. Meanwhile the cellphone maker's share price recovered on Friday by nearly 5.5 percent.

A dismantled Nokia sign at Oulu's Technology Village.
A dismantled Nokia sign at Oulu's Technology Village. Image: Junnu Lukkari

The stock value plunged 15 percent in New York and 18 percent in Helsinki on Thursday after the company issued a profit warning amid a raft of major announcements. The stock price dropped to a new low of 1.84 euros. At the close of the week's trading, it stood at 1.93 in Helsinki.

The ratings agency downgraded Nokia's long-term credit rating to the speculative level of "Ba1" and said its outlook remained negative.

"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," a statement said.

Earlier Credit Suisse downgraded its recommendation on the stock to neutral from outperform, while Nordea cut its rating to hold from buy.

Several banks and brokers, including Pohjola, Société Générale and UBS, cut their target price for the shares in the telecoms group.

Day of retrenchment

Nokia said it will close its main manufacturing plant in Salo, Finland while shuttering research facilities in Germany and Canada.

Some 10,000 people are to be let go worldwide in response to poorer-than-expected sales. Up to 3700 of the mobile phone giant's Finnish employees are being made redundant  -- apparently the largest mass firings in the nation's history.

The company also announced a management shakeup and the divestment of its luxury brand Vertu.

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