Nokia is losing handset market share

The Finnish firm, which earlier this month warned that sales were weak, made $816m (£456m) net profit in the first three months of this year.

Despite the forewarning, its shares fell by more than 4% on the news.

Analysts were taken aback by the firm's forecast that earnings per share would be lower than expected later this year.

The news confirmed fears that Nokia, long the leader in the mobile handset market, will continue to lose ground to rivals such as Samsung and Siemens.

Out of step

Nokia's latest share price in Paris Nokia's share price in New York

This trend has meant that Nokia's results have suffered despite the long-awaited recovery in global handset demand.

Although global handset sales were up 29% during the first quarter, Nokia saw growth of just 19%.

Earlier on Friday, Samsung unveiled a trebling in profits, largely thanks to sales of camera phones.

"It does not look good. It is obvious that they [Nokia] are losing market share on mobile phones, and the guidance indicates that next quarter will be worse than we expected," said analyst Urban Ekelund at Redeye.