S&P cuts Nokia’s rating

FRANKFURT — Nokia’s rating has been lowered to junk by Standard & Poor’s, the second debt rating company to strip the Finnish mobile-phone maker of an investment grade after losses at its handset business.

The ranking was cut by one step to double-bplus from triple-b-minus with a negative outlook, meaning Standard & Poor’s may further reduce the rating, it said Friday. Fitch Ratings made the same move last week. Moody’s Investors Service still rates Nokia’s debt the lowest investment grade.

“The rating action reflects a downward revision of our expectations for revenues from Nokia’s devices and services division in 2012 and a subsequent revision of our profitability and cash flow assumptions,” Standard & Poor’s said.

Nokia is burning cash 14 months after linking up with Microsoft to make Lumia smart phones, which run on the Windows operating system. The company reported a first-quarter operating loss for its handset unit this month and said the margins will be similar or worse in the current period.

Chief Financial Officer Timo Ihamuotila said the company’s financial position, with net cash of 4.9 billion euros as of March 31, “remains strong.”

“Nokia is in the middle of a transformation program which encompasses every aspect of our business,” Ihamuotila said in a statement. The phone maker is focusing on lowering costs, “improving cash flow and maintaining a strong financial position, while bringing attractive new products to market.”