Nokia profit plunges 40 percent

Nokia reported Thursday a 40 percent drop in second-quarter earnings.

The Finland-based mobile phone maker took home a profit of 227 million euros ($291 million), down from the 380 million euros a year earlier. Sales for the quarter that ended June 30 were virtually flat, inching up 1 percent to 10 billion euros from 9.9 billion a year ago.

The company's share of the mobile phone market dropped to 33 percent for the quarter, compared with 35 percent in the second quarter last year.

However, it did sell 111 million phones in the quarter, an 8 percent rise from a year ago. Sales of mobile computer and smartphone devices shot up 42 percent to reach 24 million units, Nokia reported, though its slice of that market stayed the same at 41 percent.

Chief Executive Officer Olli-Pekka Kallasvuo--who may be on his way out, according to reports--tried to strike a positive tone.

"Despite facing continuing competitive challenges, we ended the second quarter with several reasons to be optimistic about our future," Kallasvuo said in a statement. "For one, the global handset market has continued to grow at a healthy pace, led by some of the less mature markets where Nokia is strong. We are also encouraged by the solid second quarter performance of our Mobile Phones business, helped by an improving lineup of affordable models."

The company had been cautious about its outlook for the second quarter and is continuing that theme for the current quarter, forecasting operating margins of 7 percent to 10 percent. Nokia also continues to expect its share of the mobile phone market to stay flat this year while the overall industry rises 10 percent.

Although Nokia still commands the leading share of the global mobile phone market, most of its phones are low-end units that fail to deliver the profits that Apple, Research In Motion, and Samsung enjoy with their crop of higher-end phones. Kallasvuo voiced optimism about the company's upcoming smartphones, including the Nokia N8.

"We believe that the Nokia N8, the first of our Symbian 3 devices, will have a user experience superior to that of any smartphone Nokia has created," Kallasvuo said. "The Nokia N8 will be followed soon thereafter by further Symbian 3 smartphones that we are confident will give the platform broader appeal and reach, and kick-start Nokia's fightback at the higher end of the market."

Nokia recently embarked on its latest reorganization, this one designed to help launch new products more quickly and unite its high-end mobile computer and smartphones into a single unit.