Nokia (NYSE: NOK) reported second quarter earnings today, which saw its net income fall 61 percent to 1.1 billion euros ($1.74 billion), from 2.83 billion euros ($4.49 billion), compared to a year ago. The Finnish handset maker blamed among other items the 259 million euro ($411 billion) charges related to its Bochum, Germany-plant closure. Still, according to analysts surveyed by Bloomberg, this beat their expectations of a net income of 1.26 billion euros ($2 billion). Moreover, Nokia reported second-quarter sales of 13.2 billion euros ($21 billion), beating analyst predictions of 12.8 billion euros ($20.2 billion) .

Mobile device volumes rose 21 percent year on year, or 6 percent sequentially, to 122 million units, which Nokia says gives it a total global market share of 40 percent. Average selling price (ASP) fell to 74 euros ($117)  from 79 euros ($125) in the first quarter. Nokia blamed some of the fall on the declining dollar, noting that 40 percent of the ASP decline was caused on exchange rates moving against them.

Nokia chief Olli-Pekka Kallasvuo, meanwhile, said that the company’s early stage efforts to transform its business to a more services-based one saw “good momentum” in the second quarter.

Other Earnings Highlights:

— Emerging markets were once again Nokia’s strongest growth areas, especially in Latin America and Asia Pacific, the company’s two largest markets. China, usually a strong performer for Nokia, saw sales fall 16 percent quarter on quarter, while North America, still its tiniest market by a long way, saw a 73 percent increase in sales from Q1. In Nokia’s conference call, Kallasvuo said that there was “a lot more work to do [in North America] before I’m satisfied with our perfomance there.” Devices EVP Kai Oistamo said the gains in market share had been driven by two products, the 5310 with T-mobile, and the 6565 with AT&T (NYSE: T). Nokia said it would introduce more mid-range and high end products in the North American market, as it was “crazy not to move up the stack.”

— Nokia’s Devices & Services division saw its gross profit decrease 3 percent to 3.3 billion euros ($5.2 billion), compared with EUR 3.4 billion ($5.4 billion) in the second quarter 2007. Gross margin meanwhile fell to 36.1 percent from 36.7 percent year on year. Basically, Nokia is selling more low end devices than high-end ones. 

— Nokia says it expects mobile device volumes in the third quarter to increase, and for its share of those volumes to remain at about the same level from the previous quarter. Overall, it believes mobile device volumes in 2008 to grow 10 percent or more from its 2007 estimate of 1.14 billion units.

Earnings Release | Conference Call

• Earnings: Nokia Posts Profit; But Misses Analyst Estimates; Expects Market Decline