Tuesday, October 23, 2012

Nokia Corporation (NYSE:NOK) Share Tumbles On New Financing Plans

As we all know cash is critical to run any kind of business and when it comes to the smartphone industry, the cash play a very important role and therefore struggling finished phone maker Nokia Corporation (ADR)(NYSE:NOK) has set a plan to bolster  its cash balance to the extent of 750 million euros ($980 million) via convertible bonds.

The company has been under pressure over the past few quarters amid solid competition from its two two major rivals - Apple's iPhone and Samsung's Galaxy phones.

The company has been working hard to regain its glory and top position and last month introduced new models, which are expected to go on sale next month which will support Microsoft’s Windows 8 software.
In the latest quarter’s earnings, the company had revealed that its cash balance fell by 600 million euros  to 3.6 billion  in September from June.  Due to reduced cash balance, the company’s credit rating was reduced to junk over the past year. Following this, several analysts are on view that the company needs to show a turnaround in the next several months if it is to survive.

The convertible bonds will be due in 2017 and will pay a coupon between 4.25 percent and 5.00 percent. The initial price for conversion into ordinary shares is expected to be 28-33 percent above the average price of Nokia shares between the launch and pricing of the offering.

In other news, Nokia unveiled the lower price Lumia 510, which is an update of the Lumia 610 but does not use the newest version of Windows software. The 510 has a larger screen and will be sold for around $199, excluding taxes and subsidies.

Shares of NOK tumbled 6% in the pre-open session.

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