Helsinki / Stockholm: The world’s biggest mobile phone maker, Nokia Corp., on Thursday said strong sales of smart phones and lower costs helped profits rise 65% in the fourth quarter despite a drop in total revenue.

Growth surge: A Nokia store in London. Nokia’s market share in the smart phone segment grew to 40% in the reported period. Jason Alden / Bloomberg

Net profit was €948 million (Rs6,152.5 crore) in the last three months of 2009, up from €576 million in the last quarter of 2008, but sales dropped 5.3% to €12 billion from €12.7 billion.

The firm said it boosted its share of the mobile phone market to 39% from 38% in the previous quarter, and 37% in the fourth quarter of 2008.

Nokia surprised markets and its stock jumped more than 13% to €10.20 in afternoon trading in Helsinki.

In smart phones, where competitors include Research in Motion Ltd’s BlackBerry and Apple Inc.’s iPhone, Nokia said its market share grew from 35% to 40%.

“This was the surprise. Many had expected Nokia’s share of smart phones to fall even lower from earlier figures, but in fact it was up," said Michael Schroeder from FimBank. “And across the board Nokia did pretty well."

The company’s results were also boosted by the fact that special items, one-time costs, which include restructuring charges, were significantly lower than in the comparable quarter in 2008.

The mobile phone industry has been hit hard by the financial crisis, and Nokia last year slashed more than 3,000 jobs globally and temporarily laid off thousands in Finland.

In the third quarter it posted its first quarterly net loss in a decade amid falling sales, lower handset prices and a one-time charge for the fallen value of its network equipment unit.

The average selling price of Nokia handsets, which had been on a downward curve, saw its first quarterly increase since 2004—to €63 from €62 in the previous period. In the last quarter of 2008, the average price was €71.