Nokia, which until recently was the world's biggest mobile phone maker, reported a much worse-than-expected second quarter loss Thursday as it presses on with a massive restructuring of its faltering business.
The Finnish company's continued strong cash position was meanwhile met with relief by investors, sending its stock soaring more than 16 percent after the announcement.
Nokia's chief executive Stephen Elop acknowledged in the earnings statement that the April-June period had been "a difficult quarter".
In the second quarter, Nokia posted a net loss of 1.41 billion euros ($1.74 billion), about four times their loss of 368 million euros during the same period a year earlier and more than double the loss anticipated by analysts.
Analysts polled by Dow Jones Newswires had expected Nokia to post a net loss of 654 million euros for the quarter.
Shipments of new smartphones failed to make up for dwindling overall sales, which fell 19 percent from the second quarter of 2011 to 7.54 billion euros, but nonetheless beat analyst expectations of 7.24 billion.
Nokia, which recently lost its ranking of 14 years as the world's biggest mobile phone maker, dramatically changed its strategy a year and a half ago when chief executive, Stephen Elop, warned it was "standing on a burning platform" and needed to immediately shift course.
The Finnish company's new strategy involved phasing out its Symbian smartphones in favour of a partnership with Microsoft.
That alliance has produced a first line of Lumia smartphones, which Nokia is counting on to help it survive in a rapidly changing landscape marked by stiff competition from RiM's Blackberry, Apple's iPhone and handsets running Google's Android platform.
The company said it had shipped four million Lumia phones during the quarter, stressing that it had surpassed expectations in the United States.
This did not however stop Nokia earlier this month from having to slash the price of its Lumia 900 by half to just $50 after only three months in stores. And Nokia's new flagship smartphone took a hit when Microsoft recently warned that existing Lumia handsets would not be able to run its Windows 8 upgrade.
Elop stressed though that the company believed an upcoming "Windows Phone 8 launch will be an important catalyst for Lumia."
Ari Hakkarainen, an analyst with Andalys OY, however insisted Thursday this was "hopeful thinking," pointing out that even with strong software, Nokia and Microsoft will have a hard time breaking into a market dominated by the likes of Apple and Google.
"Without the whole ecosystem they cannot catch up with the others," he told AFP.
Nordea Markets analyst Sami Sarkamies was more upbeat.
"Things obviously look dark at the moment, but I think things could be a bit different once the new products are introduced in Q3," he told AFP.
Nokia has issued three profit warnings in a little over a year, and last month announced new big spending cuts and another 10,000 job cuts would be needed on top of the some 12,000 cuts already announced since the shift.
While the company is struggling, it still has a strong cash position, and although a dividends payment sent its net cash holdings down compared with the first quarter to 4.2 billion euros, it stressed it had more available money than a year ago.
This unexpectedly well-padded safety net sent its stock soaring more than 16 percent before slipping to a hike of 10.5 percent in late afternoon trading on the Helsinki stock exchange, which was up 1.07 percent.
The company, which in 2008 enjoyed more than 40 percent of the global mobile phone market, was already struggling to maintain its leading position when it entered the Microsoft partnership.
Nokia no longer provides its global market share figures, but has reportedly now seen the number drop below 20 percent.