Nokia reported its first quarter earnings on Thursday, sending a clear signal to partner Microsoft that it continues to struggle getting back on the financial track.
The report comes only a few days after Microsoft, Nokia's partner in the smartphone space, sent a strong signal that it thinks the Finnish phone maker is doing "great," and has no plans to roll out a coveted Surface Phone of its own.
The phone maker reported a first-quarter net loss on sales of €5.85 billion ($7.64bn), or €0.02 ($0.03 cents) a share, down from €0.08 a year ago.
Nokia was expected to make a loss of €0.04 ($0.05) per share on revenue of €6.63 billion ($8.73bn). Compared to the year ago quarter, however, when Nokia announced an operating loss of €1.34 billion on €7.35 billion in revenue, things are certainly looking better.
The company's operating loss was €150 million ($195.9m), representing an overall operating margin of -2.6 percent.
By the numbers:
Lumia shipments were 5.6 million, up from 4.4 million in the fourth quarter
Around two-thirds of all Lumia shipments were Windows Phone 8-based products
Total smart device sales totaled 6.1 million during the quarter
Total volume sales were down 25 percent year-over-year
Analysts were expecting between 4.8 and 5.8 million Lumia devices sold during the three-month period ending March 31.
Nokia also noted that it ended the quarter with €4.5 billion ($5.88bn) in cash, down from €4.9 billion ($6.39bn) cash on the same quarter a year ago.
Across all geographic areas, sales were down year-over-year and quarter-over-quarter. China saw the steepest drop in shipments from Q1 2012 to Q1 2013, while North American markets saw the greatest quarterly dip from Q4 2012 to Q1 2013.
Nokia chief executive Stephen Elop said he was pleased that Nokia "achieved underlying operating profitability for the third quarter in a row." He noted that tough competition in the smartphone market was the main reason behind the fall in phone sales.
We have areas where we are making progress, and areas where we are further increasing the focus. For example, people are responding positively to the Lumia portfolio, and our volumes are increasing quarter-over-quarter.
Nokia Siemens Networks delivered another strong quarter and contributed to an overall improvement in Nokia Group's cash position. On the other hand, our Mobile Phones business faces a difficult competitive environment, and we are taking tactical actions and bringing new innovation to market to address our challenges.
In pre-market trading, $NOK was down by more than 12 percent at 7 a.m. ET.
Looking ahead, Nokia said it expects second-quarter adjusted handset sales of around -2 percent. The phone maker said that it estimates Lumia shipments to increase by more than 27 percent in the coming quarter.