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UPDATE 1-Nokia shares up after upbeat outlook for NSN business

Tuesday, 29 Oct 2013 | 7:49 AM ET

(Adds detail, background, analyst comment)

HELSINKI, Oct 29 (Reuters) - Nokia gave an upbeat forecast for its telecom equipment unit Nokia Solutions and Networks (NSN), giving hope for a pickup in what will be the Finnish company's main business after the sale of its phones division to Microsoft.

Shares in Nokia rose 6 percent after the company forecast NSN's profit margin would improve in the fourth quarter to around 12 percent, plus or minus 4 percentage points, from 8.4 percent in the third quarter.

NSN's third-quarter core operating profit fell 33 percent from a year earlier to 218 million euros ($300.5 million) against an average analyst forecast of 228 million in a Reuters poll, as the impact of earlier cost cuts waned and major network upgrades in Japan came to an end.

The company, however, said NSN's sales would likely grow in the fourth quarter.

"When we look at the NSN outlook, we can see that there's a really strong final quarter coming," said Inderes analyst Mikael Rautanen. "This is absolutely a very positive thing and certainly explains the positive reaction that's visible in the stock now."

In a positive sign for Microsoft, which is due to take over the handset business some time in the first quarter of next year, sales of Lumia smartphones jumped 19 percent quarter-on-quarter to 8.8 million units, thanks to the launch of new models, while sales of basic phones rose 4 percent from the previous quarter to 55.8 million units. ($1 = 0.7254 euros)

(Reporting by Helsinki Newsroom; Editing by Tom Pfeiffer and David Holmes)

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