The Helsinki-based tech giant made 979 million euros ($1.33 billion), or 34 U.S. cents a share, compared with the year-ago $1.05 billion, or 34 U.S. cents a share. Revenue rose 4% from a year ago to $13.35 billion.
Analysts surveyed by Thomson Financial were looking for a 32-cent profit on sales of $13.1 billion.
Nokia said its first-quarter handset sales rose 21% from a year ago but fell 14% sequentially from the seasonally strong fourth quarter, to 91 million units. The company said it believes industry volume rose 13% year on year but fell 18% sequentially to 253 million handsets.
Nokia said its average selling price was flat with a year ago at 89 euros. Gross margin inched up to 33.1% from 32.4% last year.
"I'm encouraged by Nokia's first quarter 2007 performance," said CEO Olli-Pekka Kallasvuo. "Our profitability was strong, with both gross and operating margins up sequentially, excluding special items. We also saw good year on year device volume growth that led to an increase in our market share, further solidifying our number one position in the industry."
The company said its market share rose to 36% in the first quarter, but Nokia said it expects that level to hold steady in the second quarter, when it sees industry selling prices falling amid rising emerging markets sales. It said it expects to see industrywide handset sales rise 10% for the year.