Nokia's profit fell 61% in the second quarter from the same period a year ago, when the company booked a large gain from its network joint venture with Siemens, an Associated Press report said.
In an earnings report that came in above expectations, Nokia slightly upgraded its forecast for the global handset market in 2008, and said it expected to keep growing its slice of the pie, the Associated Press report said.
Four in 10 mobile phones sold worldwide are now made by the company based in Espoo, Finland.
Nokia's profit was â‚¬1.1 billion (US$1.75 billion), down from â‚¬2.8 billion (US$4.49 billion), a year earlier.
Sales rose 4% to â‚¬13.1 billion (US$20.87 billion).
The 2007 second-quarter result included a â‚¬1.8 billion (US$2.98 billion) gain from the formation of Nokia Siemens Networks, a joint venture with Germany's Siemens.
Excluding special items, Nokia said its profit rose 8% to â‚¬1.37 billion (US$2.18 billion).
'Nokia's profitability was a nice surprise,' Glitnir Bank analyst Michael Schroeder was quoted as saying, adding that profit margins in both the cell phone and the network divisions were higher than expected.
The Finnish company said its share of the global market for handsets grew to 40%, from 38% in the second quarter of 2007.
It also upgraded its forecast for the global handset market, saying mobile device volumes could grow more than its previous estimate of 10%.
However, the closely watched average selling price of Nokia phones continued to fall because of higher volumes of cheaper phones sold in emerging markets and a negative impact of the weak dollar, Nokia said.