Standard & Poor's lowered its rating for Nokia from "A" to "A-" due to expectations for weaker results over the next two years.
"We expect that Nokia's smartphone portfolio will make further significant market share losses during 2011 and 2012 until it has completed its adoption of Microsoft's Windows Phone software as its new primary software platform for smartphones," said Standard & Poor's credit analyst, Matthias Raab.
In February, Nokia's CEO Steven Elop said the company was phasing out its Symbian smartphone platform over the next couple of years in favour of a tie-in with Windows' Phone platform.
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It was a radical strategy shift that Nokia hoped would stop the slide of its market share, which has plummeted from 40 percent in the first half of 2008 to just 31 percent in late 2010.
S&P's predicts that while the new strategy was being put in place, Nokia's bottom line would suffer from heavy competition, royalty payments to Microsoft and high restructuring costs.
The downgraded rating is not surprising, since Elop himself said when he announced the new strategy that it would result in "significant uncertainties" until the transition was complete.
Standard & Poor's said that Nokia's outlook remained "stable", adding that the strategic partnership could, in the long run, help Nokia compete better against its rivals Apple, RIM and phones running Google's Android.
The rating agency predicted that once the transition from Symbian to Windows is over, Nokia's operating margins will recover to "at least 10 percent in 2013."
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