Standard & Poor's Ratings Services has lowered its long-term corporate credit rating on Nokia to “BB-” from “BB+” and affirmed its “B” short-term corporate credit rating, pushing the company’s debt once step closer to junk status.

The downgrade reflects a revision of S&P’s previous estimates of revenue and profitability for Nokia's struggling smartphone business in 2012 and 2013, the ratings agency said in a statement.

The ratings agency has also revised its cash flow assumptions, based on the impact from Nokia's restructuring of its Devices and Services division. 

"We now assume that Nokia's smartphone operations will post lower revenues than we previously anticipated over the coming quarters. We also believe that consolidated revenues for 2012 will show a decline of 16 percent to 19 percent and that the company will post a non-IFRS operating loss before restructuring costs," S&P wrote. 

S&P conceded that Nokia's revenues could stabilize in 2013 if growth from its Windows-based Lumia smartphones is able to offset the revenue decline from those smartphones using the Symbian operating system and, to a lesser extent, from the company’s feature phones. Still, the outlook is grim, with S&P forecasting a low single-digit non-IFRS operating margin in 2013. The ratings agency said it could revise its outlook on Nokia to stable if revenues in the Devices and Services division stabilized and non-IFRS operating margins returned to breakeven.

Nokia's market share continues to decline even in light of on-time delivery and favorable reviews of its Lumia line of smartphones. The company held 7 percent of the smartphone market in the second quarter of 2012, down from 12.6 percent in the fourth quarter of 2011, according to Strategy Analytics. 

Symbian devices still represent the largest portion of Nokia's sales by volume, which leads S&P to think that Nokia's market share could decline even further.

Nokia called the impact of the downgrade "limited," saying in a statement it would stay the course and focus on conserving cash, while reducing operating costs.

"We ended the second quarter 2012 with gross and net cash both higher than a year earlier," Nokia stated. "With gross cash of $11.5 billion and net cash of $5.1 billion, we have a strong financial position and robust liquidity profile." 

Nokia also noted that it has additional liquidity via a revolving credit facility of $1.8 billion. 

This is not the first time that a ratings agency has taken aim at Nokia. In the last six months, the Finnish OEM has seen downgrades from Fitch and Moody's, as well as previous downgrade from S&P back in March. In early June, Moody's downgraded Nokia’s long-term senior unsecured ratings to Ba1 from Baa3, stamping the company with a negative outlook.

Even as the company weathered more bad news, shares of Nokia today rose 2.5 percent to $2.54 in early trading.