Ripe for Acquisition? Nokia Debt Rating Cut by Moody's

Nokia NOK, already under pressure to revitalize sales and an aging phone line, had its debt rating cut to Baa2 by Moody's Wednesday, sparking renewed potential that the company could be acquired. Moody's cited a "severe weakening" of Nokia's market position, thanks to Apple's AAPL iPhone, Google's GOOG Android, Research in Motion's MSFT BlackBerry, and other competitors. “This deterioration has been caused by a loss of competitiveness of Nokia's Symbian-based smartphone portfolio and the transition of its operating systems to the Windows Phone platform,” analyst Wolfgang Draack said in a Moody's statement. Stephen Elop, Nokia's CEO, noted the difficulty in the company's quarterly earnings announcement last week. "The challenges we are facing during our strategic transformation manifested in a greater than expected way in Q2 2011." Investors have sent Nokia stock into oblivion in 2011, with the partnership with Microsoft MSFT also failing to attract major interest. Shares that were trading above $11.50 in February now trade below $6. The staggering loss in market capitalization makes the company ideal for a merger or acquisition. Moody's notes that Nokia is facing “increasing price pressure and gaps in the company's mobile-phone portfolio that are now being filled.” Potential suitors include Microsoft, Google, and Research in Motion. How a deal would be structured remains to be seen, but investors and consumers alike can surely benefit from Nokia's extensive patent catalog and technological know-how.