Nokia, once the world's biggest mobile phone maker, on Thursday posted a net profit of €202-million ($269-million) in the fourth quarter, its first quarterly profit for 18 months.
The beleaguered company, which is trying to cut costs, said that it would not pay a dividend to shareholders for the first time for more than 20 years.
"We are very encouraged that our team's execution against our business strategy has started to translate into financial results," chief executive Stephen Elop said in a statement.
In the three months ending 31 December, Nokia made a net profit of €202-million compared to a loss of €1.07-billion in the same quarter a year ago, when results were hit by a goodwill impairment charge in its Location and Commerce unit.
An average of 11 analysts polled by Dow Jones Newswires had expected a fourth-quarter net loss of €156-million.
Shares in Nokia soared earlier this month when it revealed an eight percent increase in fourth quarter sales in its Devices and Services unit to €3.9-billion ($5.14-billion).
The company sold a total of 86.3 million devices during the quarter, including 4.4 million Lumia smartphones, its new flagship product developed with Microsoft.
Nokia said at the time that the numbers were "better than expected". Still, net sales of smart devices fell 55 percent in the quarter to €1.2-billion on a yearly basis.
The company's net cash position, which is closely watched by investors, stood at €4.4-billion, compared with €3.6-billion at the end of last quarter.
Nokia dominated the international mobile market for more than a decade but has of late lagged behind smartphone rivals such as Apple and Samsung, and credit rating agencies have downgraded the company due to concerns over its profitability and its cash position.
BlackBerry maker Research in Motion (RIM) paid its Finnish rival €50-million to settle a patent dispute last year.
Analysts believe RIM will also have to pay the Finnish company a licence fee of between $2 and $5 for each handset sold using Nokia technology.
In December, Nokia withdrew all its lawsuits against RIM after reaching an agreement on patents relating to WLAN local area network technology.