An 8% increase in standard mobile handset sales failed to save phone manufacturer Nokia from posting a net loss of €151m (£132m) in its latest financial results.
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In the company's third quarter, net sales fell 13% year-on-year from €10.3bn in 2010 to €9bn. Nokia made a net loss of €151m compared to a net profit of €322m in the same period of 2010.
Overall sales of devices and services fell 30% between the third quarter of 2010 and 2011. The only devices to see an increase rather than a decline were sales of Nokia's "feature phones" - standard, non-smartphone devices - which increased 8% in units shipped year-on-year.
Stephen Elop, Nokia's CEO, admitted the coming months will be a "period that has known transition risks" but said he is "encouraged" by progress with the first Nokia experience with Microsoft's Windows Phone, which will be available to consumers later this quarter.
"In the third quarter, we started to see signs of early improvement in many areas but we must continue to focus on consistent progress so that we can move Nokia through the transformation and deliver superior results to our shareholders," Elop said.
According to IDC figures, Nokia's share in the smartphone market has fallen dramatically from 39% at the start of 2010 as Apple and Google Android devices snatched market share.
Nokia's smartphone market share is expected to decline further to 15% from 17% in the third quarter of 2010. Nokia's worldwide share of the total mobile phone market is expected to be around 29%, down from 32% in the third quarter of 2010. The BBC reported shares in Nokia have so far fallen 41% this year.
Francisco Jeronimo, research manager of European mobile devices at IDC, said Nokia's results show a "painful transition" from Symbian to Windows Phones.
Jeronimo said Nokia's new devices running its Symbian Anna and Symbian Belle operating systems are "not helping Nokia in any way."
"Failing to deliver the Windows Phones this year puts Nokia in a very dangerous position on the market," he said.
Nokia is expected to unveil its first Windows Phone device at its Nokia World event next week.
Carolina Milanesi, analyst at Gartner, said: "Nokia's strategic pricing is a necessary evil for Nokia as it needs to hold on to its installed base first then go after new users with Windows Phone 7."
Nokia reported operating losses of €487m (£429m) in the first half of 2011, fuelled by a decline in smartphone sales.