Nokia, which until recently was the world's biggest mobile phone maker, has reported a much worse-than-expected second quarter loss as it presses on with a massive restructuring of its faltering business.

The Finnish company's continued strong cash position was meanwhile met with relief by investors, sending its stock soaring more than 16 per cent after the announcement.

Nokia's chief executive, Stephen Elop, acknowledged in the earnings statement on Thursday that the April-June period had been "a difficult quarter".

In the second quarter, Nokia posted a net loss of 1.41 billion euros ($A1.68 billion), about four times their loss of 368 million euros during the same period a year earlier and more than double the loss anticipated by analysts.

Analysts polled by Dow Jones Newswires had expected Nokia to post a net loss of 654 million euros for the quarter.

Shipments of new smartphones failed to make up for dwindling overall sales, which fell 19 per cent from the second quarter of 2011 to 7.54 billion euros, but nonetheless beat analyst expectations of 7.24 billion.

Nokia, which recently lost its ranking of 14 years as the world's biggest mobile phone maker, dramatically changed its strategy a-year-and-a-half ago when Mr Elop warned it was "standing on a burning platform" and needed to immediately shift course.

The Finnish company's new strategy involved phasing out its Symbian smartphones in favour of a partnership with Microsoft.

That alliance has produced a first line of Lumia smartphones, which Nokia is counting on to help it survive in a rapidly changing landscape marked by stiff competition from RiM's BlackBerry, Apple's iPhone and handsets running Google's Android platform.

The company said it had shipped four million Lumia phones during the quarter, surpassing its expectations in the US.

This did not stop Nokia earlier this month from halving the price of its Lumia 900 to just $US50 ($A48.40) after only three months in stores.

And Nokia's new flagship smartphone took a hit when Microsoft recently warned that existing Lumia handsets would not be able to run its Windows 8 upgrade.

Mr Elop said Nokia believed an upcoming "Windows Phone 8 launch will be an important catalyst for Lumia".

The West Australian

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