Credit rating agency Moodyâ€™s has once again, for the third time, cut Nokiaâ€™s debt rating, now to Ba3.
That takes it firmly into junk territory, with Moodyâ€™s expecting the company to return to profitability only in the second half of 2013.
Wolfgang Draack, lead analyst for Nokia, said that the action â€œreflects our view that Nokiaâ€™s transition in the smartphone business will cause deeper operating losses and consequently cash consumption in the coming quarters than we had previously assumedâ€.
Moodyâ€™s said that Nokiaâ€™s management had indicated margins may not materially improve in the next three month, adding that this may â€œnot even be the weakest periodâ€ for Nokia yet.
Moodyâ€™s also warned that Nokiaâ€™s balance of net cash will gradually erode further owing to aggressive pricing, cash cost of restructuring and the launch cost for the new devices. â€œA very strong cash position cannot offset operating challenges and losses in the core business for an extended period of time,â€ it said.
Timo Ihamuotila, Nokiaâ€™s chief financial officer, said that it was disappointed with Moodyâ€™s decision but added that the impact on the company was limited.
The companyâ€™s debt has already been cut to junk status by all three leading rating agencies over the past few months.