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Nokia pulls off a profit, holds out hope for the future

At $269 million, the smartphone maker's fourth-quarter profit is a modest one -- except when compared to the big losses that preceded it.

Nokia has finally turned a profit.
Nokia has finally turned a profit.

Nokia might be down, but it's certainly not out.

The company today reported its fourth-quarter earnings, and offered up performance that might make its doomsayers think twice. During the fourth quarter, Nokia was able to generate a profit of 202 million euros ($269 million), a massive gain over the 1 billion euros the company lost during the same period in 2011. Still, Nokia's profit came amid slumping revenue that fell from 10 billion euros in the fourth quarter of 2011 to 8 billion last quarter.

On a full-year basis, Nokia could only muster 30.2 billion euros in sales, down 22 percent compared to the 38.7 billion euros it generated in 2011. Its 2012 operating profit was down to a 2.3 billion euro loss, compared to a 1.1 billion euro loss in all of 2011.

• See also: Nokia on the edge: Inside an icon's fight for survival

Nokia's Devices & Services operation also took some hits, with fourth-quarter revenue dropping from 6 billion in 2011 to 3.9 billion last quarter. That division's sales on an annual basis were down 34 percent.

The Devices division was boosted by a strong showing for Lumia sales in the fourth quarter, which hit 4.4 million units worldwide. However, the Smart Devices division could only muster 6.6 million unit sales, helping the company realize a 66 percent year-over-year decline.

Still, Nokia CEO Stephen Elop was pleased by his company's performance:

We are very encouraged that our team's execution against our business strategy has started to translate into financial results. Most notably we are pleased that Nokia Group reached underlying operating profitability in the fourth quarter and for the full year 2012.

We remain focused on moving through our transition, which includes continuing to improve our product competitiveness, accelerate the way we operate and manage our costs effectively. All of these efforts are aimed at improving our financial performance and delivering more value to our shareholders.

Although shareholders might be somewhat pleased with Nokia's financial performance, they won't be happy to find that the company doesn't plan to pay dividends for 2012. In a statement today, Nokia said that while it paid 20 cents per share in 2011, the board will propose no dividend for 2012 in an effort to improve the company's "liquidity position."

Despite some hopeful signs in the fourth quarter, Nokia did offer some words of caution. The company reported today that it expects the first quarter to "be approximately negative 2 percent," adding that it expects "competitive industry dynamics [to continue] to negatively affect the Mobile Phones and Smart Devices business units."

This story has been updated throughout the morning.