Nokia (NYSE: NOK ) rallied more than 18 percent Thursday after announcing that the company expects its Devices & Services business to exceed expectations and achieve underlying profitability in the fourth quarter of 2012. The Lumia creator currently estimates that it sold 4.4 million Lumia devices in the quarter. This is a small but significant boost for Microsoft's (NASDAQ: MSFT ) Windows Phone platform, which aims to overtake Research In Motion's (NASDAQ: RIMM ) BlackBerry as the third most popular mobile OS. Google's (NASDAQ: GOOG ) Android and Apple's (NASDAQ: AAPL ) iOS are expected to hold on to first and second place.
In total, Nokia said that it believes it sold 86.3 million units in the fourth quarter. Nearly 10 million Asha "full touch smartphones" were estimated to have been sold, along with 2.2 million Symbian smartphones.
Nokia said that its operating expenses were lower than anticipated. The company expects its Devices & Services non-IFRS operating margin to be between break even and positive two percent.
However, the company also revealed that "seasonality and competitive environment" are expected to have a "negative impact" on the firm's Q1 2013 results.
If investors were turned off by that last tidbit, they certainly didn't show it. This could be because they were too distracted by the estimate that Nokia Siemens Networks has also exceeded expectations for the fourth quarter, "delivering record underlying profits and a third consecutive quarter of underlying profitability." Nokia Siemens Networks is expected to report a non-IFRS operating margin between 13 and 15 percent.
Not surprisingly, the company said that seasonality is expected to have a negative impact on Nokia Siemens Networks in 2013 during the first quarter.
"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 in a company release . "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."
Earlier this week Nokia announced that it had teamed up with Avanade to deliver packaged Windows Phone 8 devices, applications and services to large enterprise customers.
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