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Nokia losses slow as company faces scaled-down future

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Finnish mobile phone maker Nokia slashed losses to about a tenth from a year ago, as analysts voiced optimism Tuesday about the iconic brand's future as a smaller, nimbler player. 

Nokia chief executive Stephen Elop holds a Nokia Lumia 2520 at an event on October 22, 2013 in Abu Dhabi

The company announced a net loss of 91 million euros ($125 million) in the third quarter, down from a massive 959 million euros in the same period in 2012.

Although turnover during the three-month period dropped 22 percent to 5.6 billion euros, much of that loss was due to the company's ailing handheld business, which is soon to be sold off.

Sales of low-end mobile phones fell by 27 percent in volume and 37 percent in terms of value.

"In general, there is a little bit of caution when it comes to Nokia and its future," said Ishaq Siddiqi, an analyst at ETX Capital in London.

"It doesn't have its devices and services unit anymore. It's going to have to turn to its other businesses and platforms."

Nonetheless, sales of Lumia smartphones -- which Nokia hopes can compete with Samsung and Apple devices -- were a bright spot.

Lumia sales grew by about 200 percent year-on-year to 8.8 million units, although still far behind Apple's iPhone which sold 33.8 million units in the same period.

Deciding to cut their losses after years of falling sales, the former world leader in mobile phones will sell its handset operations to Microsoft for 5.44 billion euros in early 2014.

"The third quarter was among the most transformative in our company's history," Nokia CFO Timo Ihamuotila said in a statement.

He noted that in addition to the sale to Microsoft, Nokia became the full owner of Nokia Solutions and Networks. or NSN -- formerly a joint venture with Siemens.

"(These are) transactions which we believe will radically reshape the future of Nokia for the better," Ihamuotila said.

The turnover of NSN dropped by 26 percent in the quarter but it still made an operating profit of 166 million euros and Nokia predicted it to improve further in the fourth quarter.

Some analysts said that outlook was the main cause of a five percent rise in Nokia's share value on the Helsinki Stock Exchange early on Tuesday afternoon.

"Nokia's forecasts for NSN bode well for a very good end of year for Nokia," Mikael Rautanen at the consultancy Inderes told AFP.

A Paris-based analyst speaking on condition of anonymity said the shedding of the handheld business was an opportunity for Nokia to play to its strengths.

"If things improve, a loss doesn't matter. Things have been improving and most of the losses come from the mobile phone division, which they've just sold," he said.

"On networks, these results underline how their strategy is paying off... Looking forward we can see a smaller Nokia on networks, which is going to generate some cash and be profitable."

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