DealBook: Huge Payday for Chief Executive Who Is Leaving Nokia

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Microsoft to Buy Nokia Units and Acquire Executive

Late Monday, Microsoft and Nokia said 32,000 Nokia employees would join Microsoft as a result of the all-cash deal, which is meant to turn the Finnish mobile phone pioneer into the engine for Microsoft’s mobile efforts.

Stephen Elop, the former Microsoft executive who was running Nokia until the deal was signed, will rejoin Microsoft after the transaction closes, setting him up as a potential successor to Steven A. Ballmer, Microsoft’s chief executive. Mr. Ballmer has said he will retire from the company within 12 months.

“This agreement is really a bold step into the future for Microsoft,” Mr. Ballmer said in a telephone interview from Finland. “We’re excited about the talent capabilities it will bring to Microsoft.”

The deal, which was first broached between Microsoft and Nokia executives in February, is the latest transformation of the 150-year-old Finnish company. Nokia began life as a conglomerate making products like rubber boots and car tires before reinventing itself in the 1980s as the world’s largest manufacturers of cellphones.

Nokia’s once mighty position in the mobile phone business has been lost, as the industry shifted to the era of the smartphone. Samsung and Apple divide nearly all of the profits in the global smartphone business now.

Nokia’s fall has been most spectacular in Asia, a region that its phones once dominated. As recently as 2010, the company had a 64 percent share of the smartphone market in China, according to Canalys, a research firm. By the first half of this year, that had plunged to 1 percent.

While Nokia phones used to be prized in Asia and other developing economies for their durability and value, the company was late to introduce innovations like touch screens. That left the high end of the market to brands like Apple and Samsung.

In the lower price ranges, smartphone makers from China have been more responsive to consumer demands, offering phones with features resembling those of their more expensive rivals at a fraction of the cost.

Risto Siilasmaa, Nokia’s interim chief executive, said on Tuesday that the sale of the handset business was the logical step in the company’s evolution but still pulled on his heartstrings.

“Selling a business is sometimes the right cause of action, but it’s emotionally complicated,” Mr. Siilasmaa said.

Consumers may be less concerned.

At a cellphone store in central London on Tuesday, Geoffrey Widdows, a 33-year-old engineer, said he had once been a devoted Nokia fan but now preferred Android phones because of the greater choice of apps available on phones from companies like Samsung and HTC.

“Everyone had a Nokia when I was growing up,” he said. “You just don’t see them around a lot anymore.”

A megadeal between Nokia and Microsoft is something that pundits and analysts have speculated about for years, after Mr. Elop joined Nokia and signed a pact with Microsoft in February 2011 to standardize the software company’s Windows Phone operating system.

The cellphone fortunes of the two companies have become closely intertwined since that agreement, but the relationship has done little to turn either company into a leader in the mobile business. Handsets running Windows Phone accounted for only 3.7 percent of smartphone shipments in the second quarter, according to the technology research firm IDC.

Nokia remains the second-largest shipper of mobile phones in the world, after Samsung, but that is largely because of lower-end feature phones, from which consumers are moving away. Nokia is no longer among the top five makers of smartphones.

A big question is whether Microsoft and Nokia will succeed as one company where they have not as close partners. Mr. Ballmer said Microsoft and Nokia had not been as agile separately as they would be jointly, citing how development could be slowed down when intellectual property rights were held by two different companies.

“There’s friction,” he said.

Mark Scott contributed reporting from London and Eric Pfanner contributed from Tokyo.

Microsoft Gets Nokia Units, and Leader

Late Monday night, Microsoft and Nokia said 32,000 Nokia employees would join Microsoft as a result of the all-cash deal, which would turn the Finnish mobile phone pioneer into the engine for Microsoft’s mobile efforts.

Stephen Elop, the former Microsoft executive who was running Nokia until the deal was signed, will rejoin Microsoft after the transaction closes, setting him up as a potential successor for Steven A. Ballmer, Microsoft’s chief executive. Mr. Ballmer has said he will retire from the company within 12 months.

“This agreement is really a bold step into the future for Microsoft,” Mr. Ballmer said in a telephone interview from Finland. “We’re excited about the talent capabilities it will bring to Microsoft.”

Nokia was once the mightiest company in the mobile phone business, but it has lost much of its luster as the industry shifted to the era of the smartphone. Samsung and Apple divide nearly all of the profits in the global smartphone business now.

A megadeal between Nokia and Microsoft of the sort announced Monday night is something that pundits and analysts have speculated about for years, after Mr. Elop joined Nokia and signed a pact with Microsoft in February 2011 to standardize on the software company’s Windows Phone operating system.

The fortunes of the two companies in the mobile business have become closely intertwined since that agreement, but it has done little to turn either company into a leader in the mobile business. Windows Phone accounted for only 3.7 percent of smartphone shipments in the second quarter, according to the technology research firm IDC.

Nokia remains the second-largest shipper of mobile phones in the world after Samsung, but that is largely because of lower-end feature phones, from which consumers are moving away. Nokia is no longer among the top five makers of smartphones.

A big question is whether Microsoft and Nokia will succeed as one company where they have not as close partners. Mr. Ballmer said Microsoft and Nokia have not been as agile separately as they will be jointly, citing how development could be slowed down when intellectual property rights were held by two different companies. “There’s friction,” he said.

Carolina Milanesi, an analyst at Gartner, says she believes the deal could help the companies respond more quickly to the dynamism of the mobile market. “They need to move faster,” she said.

Large acquisitions are fraught with peril, especially in the technology business, where there are challenges to integrating employees from different backgrounds into a coherent whole.

The Nokia deal echoes Google’s $12.5 billion deal to acquire Motorola Mobility, which gave it control of a trove of mobile patents and a handset business that has yet to shine under Google’s ownership.

While Microsoft still has enormous stockpiles of cash from its lucrative software business, there has been widespread speculation about how long Nokia could make it as an independent company, given how the spoils of the industry have gravitated to companies like Apple and Samsung. For Microsoft, there was risk that Nokia could have ended up as an acquisition target for another company, creating uncertainty around the future of their earlier business partnership.

Microsoft will pay about $5 billion for Nokia’s devices and services business and $2.18 billion to license Nokia’s patents. After it sells its high profile handset operations, Nokia will be left with three primary businesses: network infrastructure and services; mapping and location services; and a technology development and licensing unit.

The company will continue to do business as Nokia, licensing the Nokia name to Microsoft for use on its mobile phones for 10 years. “For Nokia today, it’s a moment of reinvention,” Risto Siilasmaa, the chairman of Nokia’s board, said in an interview.

Mr. Siilasmaa also assumed the title of interim chief executive. Since Mr. Elop plans to join Microsoft after the deal is closed, which is expected to happen in the first quarter of 2014, he resigned as chief executive and relinquished his Nokia board seat to avoid conflicts of interest. He has become a Nokia executive vice president, reporting to Mr. Siilasmaa.

Mr. Ballmer declined to say whether Mr. Elop, considered a leading contender to be his successor because of his familiarity with Microsoft and the importance of mobile to Microsoft’s future, will be considered for the job. “Our board is running an open succession process, considering internal and external candidates,” he said.

“I think it strengthens his potential for C.E.O.,” said Ms. Milanesi, the Gartner analyst. “It makes perfect sense.”

Mr. Elop, a native of Canada whose family still lives in the Seattle area, said in an interview that he believes the industry is at a “tipping point” where a third mobile phone ecosystem, based on Windows Phone, will emerge as a more vibrant alternative to the iPhone and devices running Google’s Android operating system.

In a sign of how vital Nokia’s partnership has become to Microsoft, Mr. Ballmer said the first calls he made outside Microsoft to discuss his retirement and succession planning at the company were to Mr. Elop and Mr. Siilasmaa.

Mr. Ballmer said his conversations with Nokia about an acquisition “heated up in the last several months,” but started during a mobile industry conference in Barcelona in late February.

For Microsoft, there is also an attractive financial dimension to the deal. Because Nokia is based in Finland, Microsoft can use a portion of its foreign-held cash to pay for the acquisition, allowing it to avoid hefty taxes it would otherwise pay to bring the cash back to the United States. Microsoft took a similar approach to its $8.5 billion deal to acquire Skype, the largest deal in its history.

The plan to buy Nokia is likely to upset the other companies that use Microsoft’s Windows Phone operating system on their devices, notably HTC and, to a lesser extent, Samsung. But there is little business there for Microsoft to lose. Mr. Ballmer said that Nokia’s phone currently counts for more than 80 percent of the Windows Phones sold.

In Increasing Sales of Its Lumia Phone, a Rare Bright Spot for Nokia

The company, based in Espoo, Finland, on Thursday announced a 24 percent decline in its second-quarter sales, to 5.7 billion euros, though it narrowed its second-quarter losses to 227 million euros, or $298 million, compared with a loss of 1.4 billion euros a year earlier.

The losses were lower than analysts’ estimates.

It is the eighth time in the last 10 quarters that Nokia has reported a net loss. The company saw a glimmer of light in the doubling of sales of its Lumia smartphone line. But Nokia, once the world’s largest cellphone maker, now ranks third behind Samsung and Apple and faces mounting competition from cheap devices made in emerging markets like China and India.

“When you are going through a difficult transition, you have to stay focused,” Nokia’s chief executive, Stephen A. Elop, said in an interview. “It’s hard work, but we’ve got a lot of positive things happening.”

Investors, however, disagreed, sending the company’s share price down 2.7 percent in trading in Europe on Thursday.

While Nokia remains one of the world’s largest manufacturers of cellphones, the company now relies heavily on its cheaper, low-end models, which are primarily sold in developing economies.

These devices represented almost 88 percent of the 61.1 million handsets that Nokia sold in the second quarter. They have fewer features than high-end smartphones, which are much more profitable to sell. Growing competition from rivals in emerging markets, many of which use Google’s Android software, is eating into Nokia’s earnings.

In total, the company’s non-smartphone division reported a 27 percent drop in the number of units sold, to 53.7 million, compared with the same period last year. That is almost half the number of phones that Nokia reported at the end of 2011.

In countries like China, where a growing middle-class population is clamoring for new phones, the number of devices sold by Nokia fell almost 50 percent versus the second quarter of 2012.

“There’s no good news at the lower end of the market,” said Roberta Cozza, a research director at Gartner in London. “The problem is that there are so many local emerging market players looking to build up market share.” Nokia also said on Thursday that it would cut up to 440 additional jobs from the division.

Faced with cutthroat rivals for its cheaper phones, Nokia also is trying to gain traction in the high-end smartphone market through its partnership with Microsoft. The strategy is proving difficult to execute.

Smartphones running Windows software hold less than a 4 percent market share, compared with 74 percent that use the Android operating system, according to Gartner.

Yet, in a sign of some growing customer interest, Nokia reported sales of its Lumia line of smartphones almost doubled to 7.4 million units during the three months through June 30 compared with the same period last year.

The figure represents the largest number of Lumia phones sold in a quarter by Nokia since their introduction in 2011. Last week, the company announced a new Lumia phone with a camera that has a 41-megapixel sensor.

Analysts welcomed the rising number of Lumia sales. But they raised concerns that the average price of Nokia’s smartphones fell almost 18 percent, to 157 euros, in the second quarter.

“The market would have liked to see more phones sold, but it’s a strong figure for smartphones,” said Janardan Menon, an analyst at Liberum Capital in London. “The more worrying trend is around Nokia’s average phone price. They have to bring that figure up.”

The main cause for the reduced average price was related to consumers’ continued preference for the company’s less advanced smartphones, instead of its top-of-the-range devices.

Nokia said that it expected its third-quarter phone sales to outpace those for the period just ended.

DealBook: Nokia to Buy Control of Its Joint Venture With Siemens for $2.2 Billion

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Nokia Trims Loss, but Sales Fall

Although sales of Nokia’s Lumia Windows smartphones increased by 27 percent, investors focused on the weakness in sales of its basic cellphones, which are the bulk of Nokia’s business.

Nokia, the former cellphone market leader that has tied its future to a smartphone collaboration with Microsoft, reported a 20 percent decline in quarterly sales, to 5.9 billion euros, or $7.7 billion. Shares in Nokia, which is based in Espoo, Finland, fell as much as 6 percent in Helsinki.

Stephen A. Elop, Nokia’s chief executive, said concerns about the progress of the company’s turnaround were overstated. He noted that Nokia’s financial results, and its smartphone business, showed continued signs of improvement.

“Yes, there are challenges, but we are actually pleased with the progress made so far,” Mr. Elop said in an interview.

Nokia trimmed its quarterly loss to 272 million euros, from 978 million euros a year earlier. “The problem is that there is still some uncertainty about whether the company’s survival strategy will work,” said Benedict Evans, an analyst at Enders Analysis in London, “and the market is seizing on any evidence of success or a setback.”

Two years into Nokia’s collaboration with Microsoft, the Finnish company is steadily building sales of the Lumia line, but those gains have not offset the erosion in sales of its basic models. Nokia sold 55.8 million of those so-called feature cellphones in the quarter, down from 70.8 million a year earlier, the lowest level in more than a decade, Mr. Evans said.

That part of the business has been shrinking as half the buyers of mobile phones shift to smartphones. Those remaining buyers are lured by low-cost Asian rivals, like MediaTek of China, which are flooding China and India, two of Nokia’s traditionally strongest markets, with $20 cellphones.

With its latest results, Nokia has posted an operating profit in three consecutive quarters, Mr. Elop said. The expansion of the Lumia line bodes well for the future, which will increasingly be shaped by the smartphone business. In the first quarter, Nokia sold 5.6 million Lumia phones, an increase from 4.4 million in the fourth quarter.

The average selling price of a Nokia smartphone rose 34 percent in the quarter, to 191 euros ($251).

In a conference call with investors, Mr. Elop, a former Microsoft executive, said he expected the rate of growth in Nokia’s smartphone sales to accelerate in the second quarter, with the pending introduction of a new model in the United States. Carolina Milanesi, an analyst with Gartner in San Jose, Calif., said Verizon Wireless was expected to begin selling a top-of-the-line Lumia handset this month.

“This phone is going to have a major positive impact on Nokia because Verizon Wireless is the market leader,” Ms. Milanesi said. “This will significantly boost U.S. distribution.”

Nokia already sells Lumia phones through AT&T and T-Mobile USA.

Nokia Unveils Low-Priced Phones

BARCELONA — Nokia on Monday introduced two new low-priced basic cellphones, plus two lower-priced versions of its flagship Lumia Windows smartphone — part of an effort by the former market leader to compete amid an intensifying price war in handsets.

The four new phones — the Lumia 720, Lumia 520, Nokia 301 and Nokia 105 — will help Nokia maintain and perhaps build on its position as the No. 2 maker of cellphones worldwide behind Samsung and fend off challenges by two Chinese manufacturers, Huawei and ZTE, analysts said.

The Lumia 520, selling for €139, or about $183, in Europe and $179 in the United States, is priced 25 percent less lower Nokia’s least-expensive smartphone, the Lumia 620.

“I think that with the Lumia 520, Nokia is really going to take the Windows 8 operating system to a much bigger, mass market,” said Pete Cunningham, an analyst at Canalys, a research firm in Reading, England. “I would expect their volumes of Lumia shipments to now start increasing slowly, but they still have a way to go.”

Samsung overtook Nokia last year as the leading global maker of cellphones, amassing a 23 percent market share. Nokia’s market share slipped to 17.9 percent from 24 percent during 2012, according to the market research firm IDC. Apple ended the year in third place at 9.9 percent, followed by ZTE, with 3.6 percent, and Huawei, with 3.3 percent.

The new handsets, which the company unveiled at the Mobile World Congress industry convention in Barcelona, reinforced Nokia’s strategy of targeting the least-expensive but fastest-growing parts of the market. The Nokia 105, the company’s new basic, entry-level phone, will sell for €15 — less than the price of a pizza in some countries.

T-Mobile U.S.A. has agreed to sell the Lumia 520, a 3G phone with a 4-inch touchscreen, in the United States starting in the second quarter, Nokia said.

In 2012, the global market for cellphones that cost $250 or less grew by 99 percent from its level in 2011, and accounted for more than half of all cellphones sold worldwide, according to IDC. The upper-end segment of smartphones costing more than $250 grew by only 23 percent during the same period.

“Nokia is targeting the right end of the market with new, inexpensive phones,” said Francisco Jeronimo, an analyst with IDC in London. “This is where the growth is.”

Nokia, the global market leader in smartphones as late as 2007 before Apple produced its first iPhone, trailed the likes of Blackberry, LG and Motorola with a roughly 4 percent market share in the fourth quarter, according to IDC. Huawei and ZTE, the No. 3 and No. 5, each sold more than twice as many smartphones as Nokia.

This year for the first time, more consumers around the world will buy a smartphone than a simple, basic cellphone, according to IDC.

Stephen Elop, the Nokia chief executive, said the new, lower-priced Lumia handsets would give the company a full array of smartphones it had been lacking.

“These are less-expensive devices, but they will move in much larger volumes,” Mr. Elop, a former Microsoft executive, said during an interview.

Mr. Elop said Nokia was committed to making some of Lumia’s unique features, such as digital lenses that allow users to enhance their own photos, available throughout the entire Lumia lineup, instead of reserving the most advanced features for the most expensive handsets.

The Nokia-Microsoft alliance that was announced two years ago in February 2011, Mr. Elop said, is gaining momentum. He dismissed the possibility that the company would eventually abandon its software partnership with Microsoft for another operating system, such as the Android system made by Google.

“There’s no doubt in my mind that that was the right decision” to choose Microsoft, Mr. Elop said. The alliance with the world’s largest software maker has set Nokia apart from handset makers relying on Android, Mr. Elop said, preserving an identify and edge for Nokia and its products.

With the Lumia line of smartphones expanding, Nokia can begin to sell Microsoft phones increasingly to businesses, which may already be reliant on Microsoft Windows and e-mail services in their operations, Mr. Elop said.

“Being able to bring those all together I think is a very powerful force,” he said. “And it’s something that’s just beginning.”

Nokia sold 4.4 million Lumia smartphones in the fourth quarter, up from 2.9 million in the third quarter. Mr. Elop declined to say how sales of Lumia had develpoped in the first two months of the year. But he suggested that the three new handsets introduced over the last three months would help sustain sales momentum.

The Lumia 920, 820 and 620 are new devices that will translate into new sales, he said. “All of those things will contribute to what we hope to see in the future,” he said.

In the fourth quarter, Nokia generated an profit of €202 million, compared with a loss of €1.1 billion a year earlier.

The Nokia 301, a mid-range feature phone, will be introduced in the second quarter and sell for €65. The 3G handset can display streaming video and comes with a 3.2 megapixel camera and panoramic, wide-angle lens. The Nokia 105 will eventually replace the entry-level Nokia 1280, which sold more than 100 million units in the past two years.

The Nokia 720, which will be sold initially in Asia and Europe, is a 3G handset targeting social media users. The phone, which will sell for €249, comes with 8 gigabytes of internal memory and an SD-card slot for additional storage. China Mobile has agreed to sell the handset in China starting in the second quarter, Nokia said.

Bits Blog: Nokia Lets You 3-D Print Your Own Phone Case

Nokia is turning its Lumia phones into a bit of an arts-and-crafts project. Now you can print your own cases for them.

Nokia

In a blog post published Friday, John Kneeland, a community manager at Nokia, said the company was releasing a set of files for people to create their own cases with a 3-D printer. The tool kit, available as a free download, will include 3-D templates, case specifications and recommendations for materials and best practices.

Mr. Kneeland said he believed phones would be more customizable in the future. Perhaps Nokia could offer entrepreneurs a phone template so they could build phones tailored to the needs of their communities, he said.

“You want a waterproof, glow-in-the-dark phone with a bottle opener and a solar charger? Someone can build it for you — or you can print it yourself,” he wrote.

Of course, if you’d ever want to use Nokia’s tool kit to design a case, you’d need access to a 3-D printer and some knowledge of how to manipulate 3-D virtual objects. But the release of the software kit fits with Microsoft’s marketing message for Windows Phone 8, the software featured on the Lumias. It has been trying to market the Windows Phone software as more “personal,” allowing people to customize their home screens with different tiles.

Bits Blog: How Google's Maps App for iPhone Hurts Nokia

The iOS mapping apps from Google, left, and Nokia.

Apple isn’t the only company that should feel nervous about Google’s release of a new maps app for the iPhone. Nokia may have lost whatever chance it had to get iPhone owners hooked on its mapping service.

Just hours after the Google Maps app was released Wednesday night, it skyrocketed to the No. 1 spot on Apple’s list of most downloaded free apps, with thousands of five-star reviews. Nokia’s maps app, Here, got a lot of buzz when it came out in November, but a majority of users rated it one star.

A chart on AppData, an analytics service that tracks the rankings of apps, shows that downloads of Nokia’s Here app took a nosedive in late November. Now Nokia’s maps don’t appear to be gaining any traction in the App Store.

This could put Nokia at a competitive disadvantage in the mobile industry over all. In November, Stephen Elop, Nokia’s chief executive, said the company made its maps available to iPhone owners so that it could improve its location database. The more people who look up directions or search for locations on its maps, the smarter its system gets. And if Nokia’s maps get better, the company could build more powerful location-based features just for its Lumia smartphones.

Now that iPhone owners are gravitating toward using Google or Apple maps, Nokia will have to rely on people using its Lumia phones to improve its location database. But the Lumia phones haven’t sold very well. Tony Costa, a Forrester analyst, said the overnight success of Google’s app complicated Nokia’s goals of selling handsets and bolstering its maps.

“Their core business has to succeed for Here to succeed,” Mr. Costa said. “That’s one of the challenges for them. They have to compete on the handset side, and the Here stuff will come along with that to some extent.”

Mr. Costa said that Nokia still had an opportunity to get people to use its maps through third-party apps. Nokia offers a toolkit for software developers to integrate its maps into their apps across multiple platforms, including Windows phones, iPhones, Android phones and the Web.

Nokia did not immediately respond to a request for comment.

State of the Art: Nokia Lumia 920 and HTC Windows Phone 8X Are Great, and Yet

Because competition drives innovation. Innovation leads to improvement. Improvement begets happiness.

In the tech world, some companies do their most innovative work when their backs are against the wall — especially Microsoft. Last month, it took the wraps off Windows Phone 8, the most polished edition yet of its beautiful, crystal-clear software for touch-screen phones. (My review of Windows Phone 8 is at http://j.mp/Qqfz2F.)

Unfortunately, as a Microsoft product manager told me understatedly, “We have an awareness problem.” Translation: Nobody is buying Windows phones. And since nobody’s buying them, nobody’s writing apps for them. And since nobody’s writing apps — well, you can see where this is going.

Still, Microsoft isn’t giving up. This month, Windows Phone 8 arrives aboard two fascinating new phones: the Nokia Lumia 920 ($100 with a new AT&T contract) and the HTC Windows Phone 8X ($200 from AT&T, Verizon or T-Mobile).

It’s funny about Nokia and HTC; they, too, are fallen giants. Nokia was the world’s largest cellphone maker for 14 years straight; not anymore. At the moment, it’s in seventh place among smartphone makers. It has shed tens of thousands of employees. HTC is struggling, too, having sold 36 percent fewer smartphones this year than last.

How intriguing, then, that HTC and Nokia have each chosen Microsoft as its savior, and vice versa. Loser + loser = winner?

Yes, actually. The two new phones have a lot in common — for one thing, they’re both awesome. For another, both have bigger, sharper screens than the iPhone’s famous Retina screen. (The HTC and Nokia phones have 4.3- and 4.5-inch screens. That’s 1,280 by 720 pixels, packed in 341 and 332 to the inch.)

Both have rounded backs and edges, which make them both exceptionally comfortable to hold. (The curve also makes it easy to pull them out of your pocket the right way.)

Both come in a choice of bright colors. Both phones have the same blazing fast processor. Both can get onto their respective carriers’ 4G LTE data networks (meaning very fast Internet), in the cities where those are available.

And get this — both of these phones can also charge without being plugged in. That’s right: magnetic charging is finally built right into phones. Come home at the end of the day, throw your keys in the bowl, set the phone down on the charging pad (a $50 option) — and a little chime tells you that it’s happily charging, even though no cable is in sight.

It’s pretty great. It will become even greater if this charging method (an industry standard called Qi, pronounced chee) catches on. Someday there may be charging surfaces at coffee shops, airports and hotel rooms. (Only the Verizon version of the HTC phone has this feature turned on — not the AT&T or T-Mobile versions.)

Both phones also have built-in NFC chips. These allow near-field communications, which means “this phone can do things when you tap it against another gadget.” The promise is that you’ll be able to tap on a cash-register terminal to pay for something; tap against an NFC-enabled bus shelter ad to download promotional goodies; tap two phones together to transfer a photo or address; and tap against a Bluetooth speaker to “pair” it with the phone.

In practice, there’s more to it than that. Unfortunately, the tap only introduces the phones; Bluetooth or some other technology is needed to complete the connection. And Microsoft’s coming tap-to-pay initiative is incompatible with the one Google has spent millions of dollars setting up at cash registers across the land. But we can always hope.

The HTC Windows Phone 8X is the smaller of the two new phones, but even so, it dwarfs the iPhone — it’s wider, taller, heavier and thicker. If you get the Verizon model, your Internet experience will be faster and better in more cities than on the Nokia phone, which is available only on AT&T.

The back panel is faintly textured, so you’re less likely to drop this phone than you are the shiny-backed Nokia. But the buttons — power, volume, camera — are skinny and utterly flush with the phone’s body; you practically need an ice pick to push them in.

Nokia Loss Widens as Customers Wait for Windows Phone 8

One analyst said the results had shaken his confidence that Nokia would be able to reverse its decline with Lumia, its line of Windows smartphones. The company said it sold 2.9 million Lumia smartphones in the quarter, down from four million in the second quarter, the first quarterly decline since the line was introduced in late 2011.

“This is probably the first time that I have started to doubt the Nokia comeback story,” said Pete Cunningham, an analyst at Canalys, a research firm in Reading, England. “These numbers were poor and worse than I expected.”

Nokia’s overall loss in the third quarter compared with a loss of 68 million euros in the period a year earlier. Revenue fell by 19 percent, to 7.2 billion euros in the three months through September, driven by declining sales of smartphones and its more basic cellphone line, which makes up the bulk of its sales. Company officials and analysts attributed the slowdown in Lumia sales to consumers waiting for handsets that run Microsoft’s Windows Phone 8 software, which it plans to start selling this year.

The existing Lumia lineup runs on Windows 7.5 software, and the phones cannot be upgraded to Windows 8.

“It was not a surprise that the Lumia results in the third quarter demonstrated that people were delaying new purchases,” Nokia’s chief executive, Stephen Elop, said in an interview on Thursday.

Over the next year, Nokia plans to expand its lineup of Lumia smartphones to cover the complete range of buyers. The larger lineup, Mr. Elop said, will give retailers, including mobile phone network operators, a solid alternative to Apple’s iPhone and Google’s Android phones.

“Next year is going to be a very interesting year,” he said. “A number of operators around the world are increasingly frustrated with the two strong ecosystems in their shops today. As they see a full portfolio of products with Lumia from Nokia, this will represent for them a credible third alternative.”

Mr. Elop declined to say how many new Lumia handsets would be introduced, but he said they would cover a wider range of prices, including lower-priced devices.

Mr. Cunningham, the Canalys analyst, said Microsoft’s coming worldwide introduction of Windows Phone 8 had stopped Nokia’s initial momentum with Lumia.

“The Windows Phone 8 announcement was a massive kick in the teeth for Nokia’s high-end products,” Mr. Cunningham said.

Since January, Mr. Elop has announced plans to cut a third of Nokia’s work force, or 21,000 jobs, as part of the company’s transition away from its own operating system, Symbian.

Nokia has amassed more than four billion euros in losses since announcing its Microsoft alliance in February 2011, as demand has dried up for Symbian-based phones. Nearly two years into the transition, Symbian handsets still make up a majority of Nokia’s smartphone business. The company sold 3.4 million Symbian handsets in the third quarter, 54 percent of the 6.3 million smartphones it sold over all.

With Chinese manufacturers churning out low-cost phones for its competitors, Nokia will have to make inroads with the more lucrative smartphone segment to survive.

“The real problem for Nokia continues to be the smartphone segment,” Mr. Cunningham said. “If they lose there, they are going to end up trying to compete with Chinese vendors and have a slow death.”

Nokia’s shares closed up 1 percent in Helsinki after the company, based in Espoo, Finland, confirmed the turnaround in its Nokia Siemens Networks telecommunications equipment venture, which reported a second consecutive quarterly operating profit. The venture with Germany’s Siemens, which made up 48 percent of Nokia’s sales in the third quarter, has amassed 5.3 billion euros in combined operating losses since its creation in 2007.

“The good news at Nokia Siemens has outweighed the bad news in Nokia’s smartphone business,” said Ilkka Rauvola, an analyst at Danske Bank in Helsinki.

American investors were less optimistic, however. Shares of Nokia trading in New York fell 4.8 percent, to $2.80.

Despite a Loss, Nokia Reports a Windows-Based Lift

Shares of Nokia, based in Espoo, Finland, closed 12 percent higher in Helsinki after the company said it had sold four million new Lumia smartphones running Windows in the second quarter, more than analysts had expected and double their sales in the first quarter.

The loss in the three months through June was €1.4 billion, or $1.7 billion. Sales revenue from cellphones and services rose 45 percent in North America, to €128 million, the first such increase in at least a decade.

The Nokia chief executive, Stephen Elop, said the coming release of Windows Phone 8 software in October, which promises better coordination and more features for computers and smartphones running Microsoft software, would further lift sales of Lumia devices.

“I think this shows that as consumers get a Lumia in their hands, they are very happy with what they have,” Mr. Elop, a former Microsoft executive, said during an interview.

Since January, Mr. Elop has disclosed plans to cut a third of Nokia’s work force, or 21,000 jobs, providing savings to weather the transition to a Windows-centric business. Nokia has amassed €3.5 billion in combined losses since announcing its Microsoft alliance in February 2011 as demand has dried up for its old in-house Symbian-based phones.

Benefits from the cost savings were reflected in Nokia’s net cash at the end of June, which rose 8 percent to €4.2 billion even after a €742 million dividend payment.

Francisco Jeronimo, an analyst with International Data Corp. in London, said Nokia’s non-smartphone business, which makes up 60 percent of sales, had also performed strongly in the quarter, demonstrating its ability to fend off lower-cost rivals. Nokia sold 73.5 million such phones, up 2 percent from a year earlier.

The company also said that its unprofitable network equipment venture, Nokia Siemens Networks, had generated an operating profit in the quarter, turning a corner in its two-year restructuring plan.

“Nokia’s quarterly loss was less than expected, and the volumes of its basic feature phones are increasing, which is a good sign,” Mr. Jeronimo said. “The results on Lumia show that the company’s turnaround strategy, which is a long-term project, could succeed.”

The results provided a rare bit of good news for Nokia, the onetime leader of the mobile phone business, now fighting for survival in an industry dominated by Apple, Samsung and the makers of handsets running Google’s Android operating system.

Mr. Elop said rising U.S. sales were being lifted by demand for the newest models, the Lumia 900 and Lumia 610, sold by AT&T and T-Mobile U.S.A. He said the release of Windows Phone 8, and Microsoft’s plans to aggressively promote it, would provide a “halo effect” that benefited Lumia phones.

Windows Phone 8, Mr. Elop said, will include new features like mobile payment software based on near-field communication, a short-range wireless technology, and enhanced security features.

During a conference call with analysts, Mr. Elop said he did not expect sales of the four existing Lumia handset models, which run on an earlier version of Windows and cannot be fully upgraded to Windows 8, to be adversely affected. He said Nokia was prepared to cut prices on older Lumia devices if necessary to sustain demand.

Consumers do not seem concerned or confused by the software upgrade, he said. The number of U.S. consumers activating Lumia devices for the first time rose after Microsoft announced plans for its Windows Phone 8 release, Mr. Elop said. That, he said, suggests that consumer demand for Lumia phones will remain unbroken through successive upgrades.

The positive response to Lumia overshadowed continued negative financial results 18 months into Nokia’s transition to Windows, as declining sales of Symbian devices weigh on the company’s financial results.

Sales in the second quarter declined 19 percent, to €7.54 billion. The quarterly loss of €1.4 billion followed a €929 million loss in the first quarter and compared with a €368 million loss in the year-earlier period.

Pete Cunningham, an analyst at Canalys in Reading, England, said the introduction of Lumia handsets running Windows Phone 8 software could help Nokia cement its turnaround.

“Nokia has been in free fall in recent quarters, and while it is not out of the woods yet, it does seem as if it is pretty close to the bottom,” he said.

Despite a Loss, Nokia Reports a Windows-Based Lift

BERLIN — Nokia said Thursday that its loss in the second quarter had more than tripled, but it posted the first tangible gains in its turbulent transition to a Windows-based smartphone business as sales rebounded in the U.S. market.

Shares of Nokia, based in Espoo, Finland, rose as much as 18 percent in Helsinki after the company said it had sold four million new Lumia smartphones running Windows in the second quarter, more than analysts had expected and double their sales in the first quarter.

The loss in the three months through June was €1.4 billion, or $1.7 billion. Sales revenue from cellphones and services rose 45 percent in North America, to €128 million, the first such increase in at least a decade.

The Nokia chief executive, Stephen Elop, said the coming release of Windows Phone 8 software in October, which promises better coordination and more features for computers and smartphones running Microsoft software, would further lift sales of Lumia devices.

“I think this shows that as consumers get a Lumia in their hands, they are very happy with what they have,” Mr. Elop, a former Microsoft executive, said during an interview.

Since January, Mr. Elop has disclosed plans to cut a third of Nokia’s work force, or 21,000 jobs, providing savings to weather the transition to a Windows-centric business. Nokia has amassed €3.5 billion in combined losses since announcing its Microsoft alliance in February 2011 as demand has dried up for its old in-house Symbian-based phones.

Benefits from the cost savings were reflected in Nokia’s net cash at the end of June, which rose 8 percent to €4.2 billion even after a €742 million dividend payment.

Francisco Jeronimo, an analyst with International Data Corp. in London, said Nokia’s non-smartphone business, which makes up 60 percent of sales, had also performed strongly in the quarter, demonstrating its ability to fend off lower-cost rivals. Nokia sold 73.5 million such phones, up 2 percent from a year earlier.

The company also said that its unprofitable network equipment venture, Nokia Siemens Networks, had generated an operating profit in the quarter, turning a corner in its two-year restructuring plan.

“Nokia’s quarterly loss was less than expected, and the volumes of its basic feature phones are increasing, which is a good sign,” Mr. Jeronimo said. “The results on Lumia show that the company’s turnaround strategy, which is a long-term project, could succeed.”

The results provided a rare bit of good news for Nokia, the onetime leader of the mobile phone business, now fighting for survival in an industry dominated by Apple, Samsung and the makers of handsets running Google’s Android operating system.

Mr. Elop said rising U.S. sales were being lifted by demand for the newest models, the Lumia 900 and Lumia 610, sold by AT&T and T-Mobile U.S.A. He said the release of Windows Phone 8, and Microsoft’s plans to aggressively promote it, would provide a “halo effect” that benefited Lumia phones.

Windows Phone 8, Mr. Elop said, will include new features like mobile payment software based on near-field communication, a short-range wireless technology, and enhanced security features.

During a conference call with analysts, Mr. Elop said he did not expect sales of the four existing Lumia handset models, which run on an earlier version of Windows and cannot be fully upgraded to Windows 8, to be adversely affected. He said Nokia was prepared to cut prices on older Lumia devices if necessary to sustain demand.

Consumers do not seem concerned or confused by the software upgrade, he said. The number of U.S. consumers activating Lumia devices for the first time rose after Microsoft announced plans for its Windows Phone 8 release, Mr. Elop said. That, he said, suggests that consumer demand for Lumia phones will remain unbroken through successive upgrades.

The positive response to Lumia overshadowed continued negative financial results 18 months into Nokia’s transition to Windows, as declining sales of Symbian devices weigh on the company’s financial results.

Sales in the second quarter declined 19 percent, to €7.54 billion. The quarterly loss of €1.4 billion followed a €929 million loss in the first quarter and compared with a €368 million loss in the year-earlier period.

Pete Cunningham, an analyst at Canalys in Reading, England, said the introduction of Lumia handsets running Windows Phone 8 software could help Nokia cement its turnaround.

“Nokia has been in free fall in recent quarters, and while it is not out of the woods yet, it does seem as if it is pretty close to the bottom,” he said.