Cell-phone giant

Nokia

(NOK) - Get Report

earned about $1 billion in the first quarter, slightly more than expected, but said its network-equipment unit will continue to be a drag on earnings in the current quarter.

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The shares were recently up about 4.5% to $15.87 on Instinet.

The company earned 977 million euros in the first quarter, up from 863 million euros last year, on a 3.5% decline in revenue to 6.77 billion euros. The earnings came out to 20 cents a share, about a penny better than forecasts. Network revenue fell 15% year-over-year.

For the second quarter, the company predicted sales in its handset segment will rise 4% to 12%, and forecast operating earnings of 13 euro cents to 16 euro cents, down slightly from last year but above the analyst consensus.

Nokia's cell-phone sales rose 1% in the quarter and it sold 98 million handsets. It predicted industrywide handset sales will rise by 10% in 2003.

"With this strong performance from mobile phones, we succeeded in substantially reducing the impact of difficult operating conditions in our network infrastructure business," the company said in a statement.