The fourth-quarter results provided what was likely a last glimpse of the health of its mobile business before finalising the deal with the US technology giant. (Agencies)
Nokia's devices and services unit -- the operations it has agreed to sell to Microsoft -- recorded net sales of 2.6 billion euros (USD 3.6 billion) in the fourth quarter of last year, down 29 percent from the same quarter the year before.
The devices and services business also saw an operating profit of 97 million euros in the fourth quarter of 2012 transformed to an operating loss of 198 million euros in the fourth quarter of 2013.
Sales of smart devices, primarily the Windows-based Lumia devices, took a hit in the fiercely competitive market for smartphones.
"Our smart devices net sales were affected by competitive industry dynamics including the strong momentum of competing smartphone platforms," Nokia said in a statement.
Analysts said the quarterly figures were likely to be scrutinised closely for what they had to say about Microsoft's chances of making it in the handset business.
"Microsoft bought the handset division, so of course they are interested in what shape they will get it," said Sami Sarkamies, an analyst with Nordea.
"But the decision (to take over the handset business) has been made. Even if the fourth quarter has gone badly, there's no stepping back."
For the full year 2013, Nokia's devices and services unit reported sales of 10.7 billion euros, also a drop of 29 per cent year-on-year.
Furthermore, Nokia expects the devices and services business to "generate a negative operating margin" in the first quarter of 2014, the Finnish company said in the statement.
The struggling Finnish company's plan to sell the handset business to Microsoft for 5.4 billion euro was announced in early September.
The sale of the assets, which include the Lumia smartphone trademark and technology, must take place in early 2014.
Once the world leader in mobile phones, Nokia has experienced a spectacular fall in sales since the arrival of Apple's touchscreen iPhone in 2007.
"What (Microsoft) will want to see is what demand and market share Nokia currently has in the world and how popular the devices are against other rivals," said Ishaq Siddiqi, an analyst at London-based ETX Capital.
The fourth-quarter results provided what was likely a last glimpse of the health of its mobile business before finalising the deal with the US technology giant.