Nokia reported smaller-than-expected losses for the third quarter on Thursday but warned that there were tricky times ahead as it prepares to launch two new smartphones it hopes can claw back market share from Apple and Samsung.
The Finnish phone-maker reported an underlying loss before one-off items of 969-million euros, or 0.07 euros per share compared to a profit of 0.03 euros a year earlier. Analysts had forecast a loss of 0.11 euros in a Reuters poll.
Net cash came in at 3.6-billion euros, down from 4.2-billion in June but ahead of market forecasts of 3.4-billion euros.
Nokia shares jumped and were up 8.2 per cent to 2.384 euros at 1057 GMT.
Once the world's biggest mobile phone maker, Nokia has fallen behind Apple's iPhone and Samsung's Galaxy in the world smartphone market.
Sales of the current range of Lumia smartphones fell to 2.9 million from 4 million in the second quarter with significant slowdowns in China as well as Europe.
It is now pinning its hopes on new Lumia 820 and 920 models which run on Microsoft's latest Windows 8 software and which are due to hit stores in November.
While the company needs the new models, the hype surrounding the upcoming launch hit sales of existing Lumia handsets and meant prices had to be cut. Average selling prices dropped to 160 euros from 186 euros per phone.
In a statement, Nokia said the fourth quarter would be challenging as it started to roll out the new Lumias with more marketing than ever before. It said it expected poorer Christmas sales than in previous years.
"Lofty market expectations for Q4 ignore the reality that new products will ship halfway through the quarter into an overwhelmingly competitive and congested market," said Geoff Blaber, analyst at CCS Insight.
Other analysts said hype around Christmas gifts this year would be more around tablets than phones with Apple's new mini iPad expected to be launched next week and new offerings from several companies including Amazon and Microsoft.
"The fourth quarter will be a tough one as it will take a couple of quarters to ramp up Windows Phone 8 volumes due to the competitive landscape," said Pete Cunningham, analyst at Canalys.
Nokia said its third-quarter results were helped by its telecoms equipment venture, Nokia Siemens Networks which the company said had achieved record profits.
Underlying operating profit at NSN jumped to 323 million euros from 6 million a year earlier, with cost cuts and rising sales helping to beat all analysts' expectations in the Reuters poll.
The venture is in the midst of chopping annual costs by 1 billion euros, including 17,000 job cuts.