ESPOO, Finland -- Ratings agency Standard & Poor's cut Nokia's long-term credit rating one notch into junk Friday, forecasting a further drop in revenue on declining sales for its Symbian device this year, following downgrades by Moody's and Fitch in a chorus of growing concerns over the Finnish handset maker's financial position.
In reply to Standard & Poor's move, Nokia said that it is focusing on lowering the company's costs, improving cash flow and maintaining a strong financial position, while bringing attractive new products to market.
"As we have detailed in recent announcements, Nokia is in the middle of a transformation program which encompasses every aspect of our business," Timo Ihamuotila, Nokia's executive vice president and chief financial officer said, adding that the company is implementing a "decisive action plan to position our company for future growth and success."
The downgrades come after a tough few years for the company which has been deposed from its dominant position as the world's largest handset maker. It has lost out in the high-margin smartphone sector to Apple's iPhone, while phones using Google's Android software are hitting both the high end and, increasingly, the cheaper end of the market.
Standard & Poor's said it expects the troubled company to report significantly lower margins and cash flows in 2012 than previously expected.
"The outlook is negative, reflecting the possibility of a further downgrade if Nokia fails to stabilize revenues and margins and significantly cut its cash losses," Standard & Poor's said.
Earlier this week, Fitch downgraded Nokia's long-term credit rating to junk status, BB+, from investment grade rating BBB-, and last week Moody's Investors Service lowered Nokia's credit rating to the brink of junk territory, citing a sharp decline in mobile-phone sales and competition from makers of low-end phones.
Standard & Poor's said it still expects revenue from Lumia smartphones to grow over time but not sufficiently to offset a rapid decline in revenue from Symbian-based smartphones over the next few quarters and that the volume market share of the smartphone operations could decline below 10 percent from 12.6 percent in the fourth quarter of 2011, according to market research company Strategy Analytics.