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Nokia Q2 profit beats expectations as networks division shows promise after handsets sale

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HELSINKI — Nokia enjoyed a solid 60 percent rise in net profit in the second quarter, with a good performance in its core networks division suggesting the Finnish company is succeeding in turning its business around since selling its handsets operation to Microsoft in 2013.

The profit of 347 million euros ($383 million) beat expectations and Nokia's stock jumped more than 9 percent to 6.51 euros in midday Helsinki trading.

Overall sales in the period increased 9 percent to 3.2 billion euros, helped by currency fluctuations but also increased demand for software in mobile broadband and global services.

Hannu Rauhala, senior analyst at Pohjola Bank, said the figures had dispelled fears among investors that Nokia would suffer from a general sluggishness in global network business.

"It was a good performance for Nokia, and I think markets had been worried that it too would have shown signs of the general slowdown in the industry," Rauhala said. "But it's a long-term business and we'll have to see what happens next year."

PHOTO: The July 28, 2015 photo shows Nokia headquarters in Espoo, Finland.  Telecommunications and wireless equipment maker Nokia Corp. says second-quarter net profit was 347 million euros ($383 million), with growth particularly strong in its core networks division.(Mikko Stig/Lehtikuva via AP)   FINLAND OUT, NO SALES
The July 28, 2015 photo shows Nokia headquarters in Espoo, Finland. Telecommunications and wireless equipment maker Nokia Corp. says second-quarter net profit was 347 million euros ($383 million), with growth particularly strong in its core networks division.(Mikko Stig/Lehtikuva via AP) FINLAND OUT, NO SALES

Nokia said that the networks unit, which accounts for 85 percent of total revenue, was expected to see growth of some 8 to 11 percent for the full year. It also expects improvement in the other two remaining sectors, Here mapping services and Nokia technologies, which handles the lucrative licensing portfolio.

CEO Rajeev Suri says he was "particularly pleased" with the performance of the networks sector, but noted that improvement in all three units has made the Finnish company "well positioned to deliver on our full-year 2015 commitments."

However, he warned that telecom infrastructure would continue to "remain challenging," needing further savings.

"We remain highly focused on reducing costs and improving efficiency in order to mitigate the impact of market conditions," Suri said, without giving details of possible cuts.

After being the No. 1 global mobile phone maker for 14 years, Nokia seemed to run out of steam and was unable to meet the challenges of Apple's iPhone, Samsung and Asian phone makers. It has, however, managed to stage a turnaround since selling its unprofitable handset unit to Microsoft for 5.4 billion euros in 2013.

The new, scaled-down company launched a tablet this year and says it is seeking a partner to return to the cellphone business. Earlier this week it announced the upcoming launch of a virtual reality camera, an innovative ball-shaped video-cam with eight synchronized shutter sensors and integrated microphones for spatial audio.

In its biggest move since teaming up with Microsoft in 2011, Nokia bought the ailing French telecom company Alcatel-Lucent in a 15.6 billion-euro deal, which was approved by the European Union last week.

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