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Nokia Corporation (NYSE: NOK) has been on a multiple-leg flight.  Destination: Hell.  Now it seems that any stop in Purgatory may be short-lived.  This downgrade may feel a bit late, but Society-Generale has downgraded the rating to “Sell” from “Hold” and the European price target of 3.0 Euro is now down to 1.80 Euro.  This is a situation where things seem bad, but are destined to get worse.

Nokia has been losing market share due to the explosion of smartphones.  Whether this is fair or not after the company recently went after a new Windows phone, the company is considered to be a large seller of cheaper phones in emerging markets.  What is so ironic about this story is that Nokia was just recently shown to be one of the top brands in Asia. Apparently that isn’t going to cut it.

The competition from Apple Inc. (NASDAQ: AAPL) for the iPhone and also from Samsung and Google Inc. (NASDAQ: GOOG) for Droid phones has been too steep.  Now even the emerging markets are starting to explode in smartphone use.  Even Research-in-Motion Ltd. (NASDAQ: RIMM) is not quite as in bad of shape for now as Nokia.

Ask yourself a simple question: How many do you know that have a Nokia phone?  Maybe the only hope is that Nokia can somehow get every person in the world who does not have a phone yet to buy one of their lower-end models in emerging market expansion. Or maybe an alternative hope is that suddenly no one can afford smartphones…

The downgrade already expects things to get worse.  Here is the dire warning in the Societe-Generale downgrade… if the company keeps losing share with sales declining and keeps its restructuring costs so high, then it risks burning through most of its available cash.  It ultimately even sets the conditions that it brings Nokia’s survival into question, although that is a scenario outside of the base case.  That is not exactly a call that Nokia is going bankrupt, but it sure feels like a dance around that notion without causing undue offense and pressure merely by the mention of such a possibility.

It is important to remember that billions and billions of dollars have been lost here.  Yahoo! Finance still lists Nokia as an $11+ billion market value and that is with shares at a 52-week low (and decade-plus low) of $3.03 today.  The prior 52-week range was $3.12 to $8.73 and the ADR was worth $15 in mid-2010 and over $25 back in 2008.

This downgrade did not exactly call for bankruptcy.  It just sets yet one more call against Nokia’s future.

JON C. OGG