Moody's Investors Service said Thursday that it downgraded Finland-based Nokia Corp.'s senior ratings to "A3" to "A2," with a negative outlook to reflect company's weakened position in its core business of mobile devices.
The ratings are both investment grade. They affect about 5.3 billion euros ($7.6 billion).
Moody's said Nokia's weakened position in the mobile business is due to its inflexible smart phone operating system, slowness in putting out new models and more attractive innovation by competitors. These include iPhone maker Apple Inc. and BlackBerry maker Research In Motion Ltd.
Nokia, the world's largest manufacturer of mobile communications devices, is also facing growing price competition for low-end phones, Moody's added.
The ratings agency did add that Nokia, under new CEO Stephen Elop, is addressing the company's challenges and position. This includes a partnership with Microsoft Corp. to migrate the company's smart phones to the Microsoft Windows Phone operating system from Nokia's Symbian system.
"In the short term, however, Moody's expects a significant degree of uncertainty about the financial impact on Nokia of the transition and about the level of eventual acceptance of the Windows Phone device offering," the ratings agency said.
American depositary shares of Nokia rose 4 cents to $9.06 in morning trading.