The share price jumped 8.03% in New York to $30.69 because despite an 11.8% fall in average selling prices to 90 euros ($123.10), it demonstrated an ability to grow profit with cheaper handsets.

While growth was boosted by the inclusion for the first time of Nokia Siemens Networks (NSN), the performance was still impressive with net income up 148.1% to 2.8bn euros ($3.8bn) on sales 28% higher at 12.58bn euros ($17.2bn).

The figures were all the more remarkable because of a dismal start by the 50-50 owned NSN which, like the recently merged Alcatel-Lucent, were given a painful baptism with brutal price competition from the established players, Ericsson and Huawei.

No comparable figures were available for the new unit, which lost 1.3bn euros ($1.77bn) on sales of 3.4bn euros ($4.6bn). CEO Olli-Pekka Kallasvuo acknowledged it had underperformed the market, but did not condemn its competitors for exploiting its recent entry into the market. I would do the same, he said.

Blood-letting will follow this setback and NSN has brought forward from 2010 to 2008 plans to cut its 60,000-strong workforce by 9,000 to cut costs by 1.5bn euros ($2bn) a year. It also plans a further 500m euros ($684m) annual cost synergies though it did not reveal how this is to be achieved.

Given the poor performance of the operation, it said it is no longer targeting a double-digit operating margin by the end of its first year of operations, though it expects a second-half improvement.

It is in its core mobile phone business that the company has excelled, with total volume rising 29% to 100.8 million units, at a time when it calculated that the industry as a whole managed a 14% increase in volume sales to 262 million units. It expects a slight sequential increase in third-quarter sales and a further increase in its market share.

For the year as a whole, Nokia has upped its forecast to growth of 10% or more from the 978 units achieved in 2006, from its previous estimate of up to 10%.

While Kallasvuo said Nokia’s 900 million-strong user base is the largest achieved by a consumer electronics company, North America is the one area where it is in retreat with volume sales down 21.2% to 4.1 million units in the quarter.

While Motorola’s drive for market share led it to plunge into the red, Nokia has been able to take profitable advantage of the boom in sales of inexpensive handsets to developing countries. In its mobile phone business, falling selling prices led to a 1% increase in sales to 5.9bn euros ($8bn) the operating profit grew 28% to 1.3bn euros ($1.77bn).

There was even faster growth of 85% to operating profit to 561m euros ($767m) of its higher end multimedia devices on sales that increased 42% to 2.7bn euros ($3.69bn).

Its enterprise solution business has finally moved out of the red with an operating profit of 99m euros ($135m) on sales up 95% at 549m euros ($751m). Though it trails far behind RIM, it said it won seven new email operator customers for its Intellisync software and 300,000 users were signed up in the quarter.

With more users taking advantage of its Maps software on the latest phones equipped with GPS technology, Kallasvuo is now mulling how it can squeeze more revenue now the mobile internet is taking off.

Martin Garner, director of wireless intelligence at Ovum, commented: Nokia Enterprise met its goal of breaking even in the second quarter. Its revenue grew 94%, with almost all of the growth coming from increased sales of devices, notably the E65 and E61i. It shipped 2million E-Series devices in the quarter.

The only weakness in the devices results was in the US where sales fell 21% year-on-year and 14% sequentially. Nokia is putting great focus on the US to fix this and the first signs of recovery can be seen from N-Series sales, which more than doubled (from a very low base) during the year.

But Nokia Siemens Networks did not fare so well. It is now clear that NSN was optimistic about customers’ reaction and has found them more hesitant about committing to large orders than it had hoped. NSN said its sales were hit by unusually aggressive pricing in the second quarter, something Ericsson did not appear to suffer from during the quarter. Its sales were also hit by the management work involved in integrating the two companies. Furthermore, its profits were hit by the mix of lower-margin regions and products as well as additional costs from the merger. Nokia has decided that it needs to deal with this by bringing forward its rationalization program by two years and further cutting annual costs.