Moody’s Investors Service became the second of the “big three” ratings agencies to downgrade Nokia following the vendor’s poor Q2 results last week, noting that “a return to profitability in the Devices & Services segment on the back of smartphones with the Windows Phone 8 mobile operating system is by no means assured”.

It warns: “We estimate that funds from operations in the core business have not materially improved in Q2 and will deteriorate further due to aggressive pricing, cash cost of restructuring and launch cost for the new devices.”

The agency said that while Nokia achieved a positive cash flow before dividends during the period, it was boosted by EUR400 million in intellectual property licensing prepayments, and EUR120 million from Nokia Siemens Networks – which is set to see its own cash flow issues later in the year due to restructuring costs.

Timo Ihamuotila, Nokia’s CFO (pictured), said in a statement: “While we are disappointed with Moody's decision, its impact on the company is limited. We are quickly taking action to position Nokia for future growth and success.”

Moody’s decision follows swiftly on the heels of a downgrade from Fitch Ratings, which similarly warned of the troubles Nokia is facing in rebuilding its smartphone business.

The third of the triumvirate, Standard & Poor’s, has not commented on Nokia’s most recent results.

All three made downgrades in the light of Nokia’s Q1 numbers.