Nokia Has Positive News With a Negative Twist

In what felt like an odd twist at this point, Nokia (NYSE:NOK) came out with good news Thursday that could signal the phone-maker is finally getting some traction after 5 slippery years of decline.

First released just over five years ago, the popularity of Apple’s (NASDAQ:AAPL) iPhone may have had a direct impact on Nokia’s five straight years of annual decline in share price. Even when Nokia CEO Stephen Elop chose to pursue Microsoft’s (NASDAQ:MSFT) Windows phone software in 2011, the company didn’t see any significant market response.

What’s changed?

Maybe smartphone users wanted a change, maybe Google’s (NASDAQ:GOOG) Android and Apple’s iOS weren’t cutting it anymore, or maybe Windows loyalists or people too familiar with Windows to try adjusting saw the new Windows-based Nokia devices as the perfect platform for them to expand their digital lives.

It’s difficult to say exactly what’s changed for Nokia and its devices, but something is clearly turning around. Exceeding prior forecasts, the company reported increased profitability in the fourth quarter. Operating profit at its handset division was at a break-even level, or around 2 percent of sales, compared to the operating loss of up to 10 percent of sales it had predicted in October.

Nokia’s Lumia smartphone sales went from 2.9 million in the third quarter to 4.4 million in the fourth quarter, making fourth-quarter sales more than 5 percent of Nokia’s total mobile-phone sales of 86.3 million for the whole of 2012. Despite the positive news, Nokia has forecast a negative first quarter for 2013 with an operating loss equivalent to 2 percent of sales, but the margin of error could swing that number in Nokia’s favor in the end.

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