Nokia Corp., the world’s largest handset maker, Thursday posted fourth quarter profits that beat expectations as it boosted its share of the lucrative smartphone segment, marking a strong comeback in the battle with iPhone-maker Apple Inc.

Nokia reported net profit of EUR948 million for the three months to Dec. 31, up from EUR576 million a year earlier and beating analysts’ expectations for EUR620 million.

The hype surrounding the unveiling of Apple’s iPad Internet tablet Wednesday couldn’t take the shine off Nokia’s market-busting performance, and at the close its shares ended up EUR0.89, or 9.9% at EUR9.91.

Nokia and Apple are locked in a battle for dominance in the lucractive smartphone segment and many expected Nokia to lose further market share in area it previously dominated. Nokia has also moved back into the computing segment with its netbook, a segment Apple’s Chief Executive Steve Jobs Wednesday took aim at with the iPad.

But demand for Nokia’s high-end devices, such as its N900 and N97 smartphones, led to an increase in handset market share to 39% in the fourth quarter from 37% a year earlier.

“We grew our market share in smartphones in the fourth quarter, driven by the successful launch of new touch and QWERTY models,” said Chief Executive Olli-Pekka Kallasvuo.

Cost cutting also helped; Nokia trimmed costs throughout 2009 in response to tough market conditions and by the end of December had around 124,000 employees, down from 126,000 a year earlier.

[Via]

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