NOKIA REPORTED a 73 per cent fall in fourth-quarter earnings as sales of its new Windows Phones failed to dent the dominance of Apple’s iPhone or compensate for falling sales of its own old smartphones.

The world’s largest mobile phone maker by volume last February unveiled a major strategy shift to Microsoft software for its smartphones in an attempt to challenge Apple and Google’s Android. But Apple’s phones in particular have proved far more popular. Apple reported earlier this week sales of 37 million iPhones for the December quarter. Nokia has sold more than one million Windows Phones since its launch in mid-November.

“It is more than some were expecting, but it’s not going to worry Apple or Google,” said analyst Nick Dillon from research firm Ovum.

Nokia said it expects its phone business underlying earnings to be around break even in the first quarter, well below analysts forecasts, with sales falling more than usual in the seasonally weaker quarter.

“The report highlights that the start of the Windows strategy is slow, and we have very little concrete data to predict its success at this point,” said analyst Michael Schroder from FIM Securities. “There are a lot of uncertainties. These are critical times for the future of the whole company. The next months will be extremely important”.

Nokia’s fourth-quarter core earnings per share of €0.06 were better than the market’s expectation for €0.04. The results were boosted by a $250 million payment from Microsoft as part of the Windows Phone sales deal. Microsoft has tried to enter the mobile industry for more than 10 years, but with little success. Its market share is 1-2 per cent.

Nokia’s quarterly net loss totalled €1.1 billion, or €0.29 per share, due to a €1.1 billion writedown for its digital mapping assets. The phone maker proposed a €0.20 per-share dividend for 2011, slightly more than expected. The board put forward Risto Siilasmaa as its next chairman to replace Jorma Ollila from May. – (Reuters)