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Nokia continuing operations plagued by tricky quarter as NSN sales drop 22%

Nokia has reported an overall net loss of €25 million [£20.5 million] for Q4 2013 with the profits it derives from “continuing operations” dropping rapidly even though it no longer includes its devices and services unit.

Related: ‘Weak’ Nokia credit rating downgraded by S&P following £1.5bn NSN deal

The Finnish firm announced that continuing operations recorded an operating profit of €274 million [£225 million], which represented a drop of 17 per cent compared to the previous quarter with net sales down 21 per cent to €3.48 billion [£2.86 billion] and the company’s acting CEO warning that worst is yet to come.

"During the fourth quarter, Nokia's continuing businesses produced a healthy underlying operating margin of 12 percent," said Nokia chairman and acting CEO Risto Siilasmaa. "While the first quarter of the year is seasonally weak for our continuing operations, we continue to expect the closing of the Microsoft transaction to significantly improve Nokia's earnings profile."

A large chunk of its continuing operations is made up by NSN, its networks business, which experienced a drop of four per cent in operating profit to €243 million [£199 million] and sales declined by 22 per cent to €3.1 billion [£2.5 billion].

As for its “discontinued operations,” which includes its devices and services wing, Nokia reported an operating loss of €198 million [£162 million], down from a profit of €97 million [£79.7 million] in 2012, and smartphone sales dropped 29 per cent to €2.63 billion [£2.16 billion].

The sales drop was “primarily due to lower Mobile Phones net sales and, to a lesser extent, lower Smart Devices net sales,” according to a conference call quoted by Mobile World Live. Earlier figures showed that Nokia sold 30 million Lumia handsets in 2013, which was double the amount it shipped in the previous year.

Related: Microsoft’s acquisition of Nokia’s mobile business: An effort to imitate Apple?

The sale of its devices and services unit to Microsoft for £3.2 billion should complete in the current quarter with the majority of regulatory approvals already received and Microsoft faces a task in turning around the listing vessel.