Finally some good news from Nokia (NOK). Its shares were up as much 20% on Thursday after the pre-release of positive fourth-quarter profit and sales numbers, showing a return to marginal profitability for its previously flailing mobile unit and a surprisingly big jump in smartphone sales. Nokia said it sold 4.4 million of its top-shelf Lumia smartphones in the fourth quarter, as well as 9.3 million lower-cost Asha phones. Both were big increases from the third quarter, in which Nokia sold only 2.9 million Lumia devices and 6.5 million Asha units.
The better than anticipated numbers were driven in particular by strong sales of the company's flagship Lumia phone, which runs Microsoft (MSFT) Windows Phone 8 operating system. The mobile giant, once the king of the wireless industry, has of course stumbled badly in recent years as it has watched Apple Inc. (AAPL) and Samsung (SSNLF.PK) rise to the top of the mobile market with their smartphones.
Thursday morning, Nokia held a conference call with analysts, during which CEO, Stephen Elop said: "Solid execution against our strategy enabled us to exceed expectations. Moving forward, we remain focused on ramping up Lumia shipment volumes and reaching new markets." While the company deserves credit for this performance, I would recommend that you remain cautious. Although these improvements are indeed encouraging, the company clearly still has a long row to hoe to gain back some of the market share it has lost over the past five years, or to hold onto the remaining share it has for that matter.
What will Nokia be able to do to keep market share outside of cutting its prices? Then what are investors left with? After posting a string of negative results, the company deserves credit for yesterday's news. But let's not get carried away here. The fact that the stock is up might just present an excellent opportunity to secure profits or short the rally. Nokia reports its full fourth quarter on Jan. 24.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.