Reacting to Moody's ratings agency downgrading its debt grade to near junk status on Monday, Nokia has said its financial position remains strong.

“Nokia's financial position remains strong. As of March 31 2012, Nokia had gross cash balances of EUR 9.8 billion, and a net cash position of EUR 4.9 billion”, the company said in a statement

Earlier Moody's downgraded Nokia's long term credit rating to Baa3 and maintained the negative outlook on the rating. Moody's stated that its investment grade rating is backed by Nokia's strong liquidity position and capital structure.

It said that cash conservation remains a priority for Nokia in the current transition. We are making progress with our previously announced targets to reduce non-IFRS operating expenses by more than EUR 1 billion in Devices & Services, and to reduce non IFRS operating expenses and production overheads by EUR 1 billion in Nokia Siemens Networks.

"Nokia is quickly taking action. 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' Executive Vice President and CFO.

Nokia will report its first quarter 2012 results on April 19, 2012.

Moody's noted that Nokia's cell phone volumes dropped 16 percent in the first quarter due to increasing competition from makers of low-end phones or new phone promotions by Chinese carriers.

"While volatility by quarters is not uncommon, Moody's believes that the structural challenges facing Nokia's mobile phones segment may not be easy to address," the rating agency said.