HELSINKI Moody's dealt a fresh ratings blow to Nokia NOK1V.HE on Monday, dragging its shares to their lowest level in 15 years and reflecting the Finnish handset maker's struggle to compete with Apple (AAPL.O) and Samsung (005930.KS).
Moody's cut Nokia's long-term credit rating to Baa3, one level above speculative grade, sending the already battered shares to a historic low of 2.948 euros. Standard & Poor's announced a similar downgrade in March.
The shares have been on a declining trend since a profit warning last Wednesday, and they broke through the technical and psychological barrier of 3 euros earlier on Monday for the first time since 1997.
Nokia said last week that it would post losses for the first and second quarters.
"Moody's believes that the structural challenges facing Nokia's mobile phones segment may not be easy to address, such as the market share gains recorded by makers of very low-end phones or new phone promotions by Chinese carriers," the U.S. ratings agency said.
Nokia quickly defended its financial position, saying it had gross cash balances of 9.8 billion euros ($12.8 billion) and a net cash position of 4.9 billion euros as of March 31.
"Nokia will continue to increase its focus on lowering the company's cost structure, improving cash flow and maintaining a strong financial position," Timo Ihamuotila, Nokia's chief financial officer, said in a statement.
In the first quarter Nokia's cash flow was 700 million euros negative.
In the second quarter, when losses from the phone business could widen, the firm is also due to pay out dividends of around 750 million.
Nokia is in the midst of a restructuring programme to cut annual costs at its phone unit by more than 1 billion euros, and is expected to unveil further cuts over coming months. The latest round of 4,000 job cuts was announced in February.
The once-dominant mobile phone maker lost the top spot in the lucrative smartphone market last year to Apple and phones running Google's (GOOG.O) Android system. It also faces tough competition from nimble Asian competitors at the low end.
The stock had already crashed more than 50 percent since Nokia announced in February 2011 that it was dropping its own Symbian operating software and switching to the largely untried Windows Phone system developed by Microsoft (MSFT.O).
Sales of Symbian phones have been falling faster than originally expected, and sales of new Windows phones have yet to make up for those losses.
Nokia is due to report first quarter results on April 19. ($1 = 0.7644 euros)
(Reporting by Helsinki Newsroom; Editing by Helen Massy-Beresford and Hans-Juergen Peters)