Nokia, until recently the world's biggest mobile phone maker, has posted a third quarter net loss of 969 million euros ($1.23 billion), compared to a loss of 68 million euros a year earlier.
However, shares in the company rose by more than 9 per cent in Helsinki after sales came in higher than forecast.
The group's cash position was also slightly better than expected.
Nokia has suffered a string of downgrades by international credit rating agencies over the past few months amid worries over its future profitability and its cash position.
The Finnish company's chief executive Stephen Elop described the third quarter as "difficult", with sales down by 19 per cent to 7.2 billion euros.
The sales figure was however better than the market had expected.
Analysts polled by Dow Jones Newswires had forecast average sales of 6.9 billion euros.
Nokia dominated the international mobile market for more than a decade but has of late lagged behind smartphone rivals such as Apple and Samsung.
Mr Elop took the helm of the troubled company in 2010 and phased out the Symbian operating system for smartphones in favour of a partnership with Microsoft.
The result has been the Lumia range of phones, which has been criticised for not being competitively priced.
The price of the flagship Lumia 900 was heavily discounted in the US market following disappointing sales.