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Surprise, surprise: Nokia's Q4 rides high on Lumia sales

The mobile phone business exceeds expectations and, hallelujah, Nokia shows signs of "underlying profitability." Moving 4.4 million Lumia smartphones had to help.

Don Reisinger
Former CNET contributor Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.
Don Reisinger
2 min read
Stephen Shankland/CNET

Nokia is so excited about its fourth-quarter performance that today it announced preliminary financial information to let shareholders know how well it performed.

During the fourth quarter, Nokia's Devices & Services operation not only exceeded expectations, but delivered "underlying profitability." The struggling company said that the division's mobile phones unit delivered better-than-expected results, with 86.3 million total unit sales. Nokia's Windows Phone-friendly Lumia line generated 4.4 million unit sales, and the company's Asha line of handsets for emerging markets tallied 9.3 million units sold.

"We are pleased that Q4 2012 was a solid quarter where we exceeded expectations and delivered underlying profitability in Devices & Services and record underlying profitability in Nokia Siemens Networks," Nokia CEO Stephen Elop said today in a statement. "We focused on our priorities and as a result we sold a total of 14 million Asha smartphones and Lumia smartphones while managing our costs efficiently, and Nokia Siemens Networks delivered yet another very good quarter."

Since it was a preliminary release, Nokia didn't provide concrete financial performance information. However, the company estimates that net sales in its Devices & Services business hit 3.9 billion euros ($5.1 billion).

Still, it wasn't all celebration last quarter. Although sales were strong in Nokia's Devices & Services division, they were down significantly compared to the 6 billion euros the company's Devices & Services operation generated in the fourth quarter of 2011. In the fourth quarter of 2010, Devices & Services generated 8.5 billion euros.

Investors, however, seem pleased by today's news. In pre-market trading, the company's shares are up 17.6 percent to $4.41. That investor reaction is likely due to Nokia's ability to beat forecasts, rather than the year-over-year comparison. Investors are well aware that Nokia is having some trouble competing in the increasingly competitive mobile space, but that the company could have generated an underlying profit and beaten expectations gives investors some hope that things can turn around.

But despite today's good news, Nokia's future is decidedly uncertain. The company said today that it expects its operating margin in the first quarter to be negative 2 percent, adding that "seasonality and competitive environment are expected to have a negative impact on the first quarter 2013 underlying profitability for Devices & Services, compared to the fourth quarter 2012."

Nokia plans to release its official fourth quarter and full-year 2012 results on January 24.

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

A rare view of Nokia's home turf (pictures)

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This story has been updated throughout the morning.