STOCKHOLM--Finland's mobile-network maker Nokia Corp. (NOK) said its expectations for 2014 have improved, as its financial performance in the latest quarter was boosted by the sale of its handset business to Microsoft Corp. (MSFT)

Nokia swung to a second-quarter net profit of €2.51 billion from a year-earlier loss of €226 million, buoyed by a €3.2 billion gain from the sale of its handset business to Microsoft in late April.

Nokia, excluding the gain from the sale and discontinued operations, reported a €26 million net loss in the second quarter, compared with a €113 million loss for the non-device operations in the same period a year earlier.

Revenue fell to €2.94 billion from €3.16 billion, while operating income increased to €284 million from €12 million.

After the sale of the handset operations, Nokia's main business is now its mobile-network unit, which accounts for almost 90% of revenue and competes with Sweden's Ericsson and China's Huawei Technologies Co.

Long plagued with losses and overcapacity, the mobile-network unit returned to profitability last year, after slashing costs and exiting several areas of business. On Thursday, Nokia raised its outlook for the unit and said it expects revenue for the network business to grow in the second half compared with a year earlier. Underlying profitability for the network business this year will be at, or slightly above, Nokia's long-term target range of 5% to 10%, the company said.

Nokia's move to sell its ailing handset business to Microsoft to focus on mobile networks has been widely cheered by investors and analysts. On Wednesday, Nokia shares closed at €5.72.

Write to Sven Grundberg at sven.grundberg@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Nokia (NYSE:NOK)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Nokia Charts.
Nokia (NYSE:NOK)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Nokia Charts.