Finnish mobile maker Nokia shipped fewer phones than forecast in the second quarter, despite a 32 percent rise in sales of its flagship Lumia smartphone.
Shares traded down 4.26 percent after the news, as mobile phone sales disappointed, falling by 4 percent to 53.7 million units, below market expectations of 56.2 million. Shipments of Lumia smartphones rose to 7.4 million quarter-on-quarter, but missed estimates of 8.1 million.
Nokia's net sales came in at 5.7 billion euros ($7.5 billion) in the second-quarter, below the 6.4 billion euros expected in a Reuters poll.
However, analysts said that the rise in Lumia shipments marked a breakthrough for Nokia, after a significant marketing push by the firm.
"Fantastic, well done Nokia," Dan Wagner, CEO and founder at mPowa Technologies told CNBC on Thursday. "This really says that their smartphone initiative is starting to pay off."
Ian Fogg, head of mobile at research firm IHS Global Insight, said that although Nokia was clearly still struggling, its Lumia shipments were one of several bright spots in its results.
On the downside, Nokia's net sales to Greater China showed a sharp drop of 57 percent from last year, a greater drop than for any other markets. Fogg attributed this to "collateral damage" from Nokia's decision to pair with Microsoft's Windows operating system, which is integrated with three social media sites - Facebook, LinkedIn and Twitter - that are unavailable in China.
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Nokia's latest results could heap more pressure upon Chief Executive Stephen Elop who unveiled a five-year plan in 2011 to turn the company around. Now in its third year, the plan - which involved changes in manufacturing, research and development - has yet to bear fruit with figures continuing to show weakness.
Nokia's strategic partnership with Microsoft remains in place, with additional models of its Lumia smartphone series announced in the last year. Earlier in July, Nokia introduced the Lumia 1020, a smartphone with a 41-megapixel camera, which uses Microsoft's Windows operating system once more. It's due out in the U.S. market on July 26 for $299.99 with a two-year contract, and is due to be available later in other markets, including China.
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Nokia is not alone in reporting weaker figures. Samsung missed estimates in July and HTC announced a continued slide in revenues. Analysts at the time spoke of concerns of a saturation in the wider smartphone market, with new vendors like Huawei and ZTE challenging the status quo.
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The Finnish firm is still firmly behind rivals Apple and Samsung after being the darling of the tech space in the late 1990s and early 2000s. The latest data from research firm IDC shows Nokia's global market share was 14 percent in the first quarter of 2013, behind Samsung's 46 percent. Market share also fell 30 percent from 2011 to 2012, according to IDC.
—By CNBC.com's Matt Clinch. Follow him on Twitter @mattclinch81.