The Finnish group, which has been superseded by Apple as the world's biggest smartphone producer by volume in the three months to June, slumped to a €368m (£324m) net loss.
Shipments of Nokia's smartphones fell 34 per cent to 16.7 million compared to a year ago.
Nokia's chief executive, Stephen Elop, commented: "We are making better than expected progress toward our strategic goals."
He added: "In smart devices, those who already have viewed our early Windows Phone work are very optimistic about the devices Nokia will bring to market and about the long-term opportunities."
Earlier this week, Sony Ericsson posted a loss of €50 million for the quarter ending June 30th due to supply chain disruptions.
According to the firm, the massive earthquake and tsunami in Japan has disrupted its supply chain, thereby affecting phone sales.
Posted by Andre Dixon
