On Monday, Moody's Investors Service downgraded Nokia's corporate debt to near-junk status. The company's decline in sales numbers and 35 percent fall in revenue have earned it a Baa3 rating, or one step away from non-investment grade. This latest drop marks the most recent stumbling block for a company that was once the pinnacle of Finnish innovation and pioneered the global rise in mobile phones.

Nokia's financial reputation has been on the decline for some time, with its unit shipments dropping from 26.5 million in Q3 2010 to just 16.8 million in Q3 2011, capturing 14.4 percent of the global smartphone market. Forbes points out that Nokia is being edged out of the low-end handset market in countries like Africa, India and China by companies like ZTE and Micromax, which is negatively affecting its shipment figures.

The company is in the middle of recasting itself as a mid-range to high-end smartphone source with its Lumia line of Windows Phone handsets. This includes AT&T's Lumia 900, which launched with a data connectivity glitch that Nokia quickly owned up to and fixed. However, given that the high end of the market has been plenty saturated with RIM, Apple, and Android devices—the company's strategy remains quite a gamble.

But the low- to high-end transition is happening too slowly for Moody's tastes: "Nokia's transition in its Smart Devices from Symbian-based phones to the Windows-based Lumia devices is proving more challenging than expected given that sales of Symbian-based devices are falling off very quickly while Lumia sales are only ramping up slowly," the agency said in its report.

Nokia responded that its investment rating is backed by its "strong liquidity position and capital structure," with a gross cash balance of €9.8 billion ($12.8 billion). "Nokia will continue to increase its focus on lowering the company's cost structure, improving cash flow and maintaining a strong financial position," said Timo Ihamuotila, Nokia's executive vice president and CFO, in a statement.

AT&T, Nokia's partner in relaunching the brand in the US, did not respond immediately to requests for comment. Nokia is set to announce its first-quarter results for 2012 on April 19.