Nokia Oyj, a year into an alliance with Microsoft to regain market share lost to Apple, sold more smartphones last quarter than projected, sending the shares 7% higher.

Nokia sold 19.6 million smartphones that can handle tasks such as video calls and showing movies, the Espoo, Finland-based company said on Thursday. Analysts had predicted sales of 18.5 million smartphones. Apple sold 37 million iPhones in the period.

Nokia reported a net loss of 1.07 billion ($1.4 billion) because of a 1.1-billion impairment loss on its location unit. Sales declined 21% to 10 billion as deliveries of lower-priced handsets shrank.

CEO Stephen Elop is betting Nokia can sell Microsoft-based Windows Phones fast enough to compensate for the 10-year-old Symbian line it\'s phasing out. Nokia\'s Lumia line went on sale in Europe in November, and is gradually expanding into larger markets such as India and China where the smartphone battle is just beginning. Nokia shares traded 4.9% higher in Helsinki.

Elop, 48, is also refreshing Nokia\'s cheaper handset lines, which have declined against competition from Asian manufacturers. The company introduced the colourful Asha line of dual-SIM handsets in October, and is revamping its low-end software to run more apps and compete better against cheap Android handsets.

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