Moody's MCO owngraded Nokia's long-term credit rating to Baa3 from Baa2 and maintained its negative outlook on the rating, heaping more pressure on the troubled mobile-phone maker as it struggles to realign its business strategy and regain traction in the lucrative smartphone business.

In a statement, Nokia's Chief Financial Officer Timo Ihamuotila said the company is "quickly taking action" to reduce costs and added that cash conservation is priority for the company, as it switches to Microsoft Corp.'s MSFT Windows software for its mobile handsets.

"Nokia will continue to increase its focus on lowering the company's cost structure, improving cash flow and maintaining a strong financial position," Mr. Ihamuotila said.

Nokia's gross cash balance was at €9.8 billion ($12.82 billion) as of March 31, and it has a net cash position of €4.9 billion, it said.

Nokia has set a target of reducing its operating expenses by more than €1 billion at its main Devices & Services mobile phone unit. It is targeting another €1 billion in savings for its Nokia Siemens Networks network equipment joint venture.

The company is "making progress" in achieving these goals, it said.

The credit downgrade follows Nokia's warning last week that intense competition in fast-growing markets would hit its performance in the first half of this year, as it undergoes a major strategy overhaul.

In the U.S. and in other big markets for high-end smartphones, Nokia has struggled to make headway despite a big bet on high-end devices powered by Microsoft's software.

Nokia is also losing its dominance in developing countries such as India and in the Middle East as consumers increasingly dump their basic Nokia phones for cheap smartphones running Google Inc.'s GOOG Android operating system.

By: DocMemory
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