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Finland's Nokia
Overall revenue held up well to come in slightly ahead of forecasts, but Nokia said profits dropped due to lower software sales, higher research and development costs and challenging conditions in Europe and Latin America.
Nokia expected some of the negative factors to ease in the second half of the year.
However, it signalled a more cautious stance on full-year networks profitability, saying it expects non-IFRS operating margins around the midpoint of its earlier goal of 8 to 11%. Analysts in Reuters poll had been expecting a full-year margins of 11%.
The network unit, where Nokia competes mobile leader Sweden's Ericsson
Analysts in a Reuters poll had on average expected a profit of 226 million euros and a margin of 8.7%.
Nokia, once the world's largest maker of mobile phones, last year sold its former flagship phone business to Microsoft
The patent unit doubled its quarterly profit to 193 million euros, compared to 86 million euros expected by analysts.
The takeover of Alcatel-Lucent is aimed at achieving scale to better compete with Ericsson and Huawei, as well as wring out cost savings of 900 million euros by 2019, amid weak growth prospects for the industry.
Nokia's shares have fallen more than 11% since the Alcatel deal was made public, as many analysts see risks in integrating the companies and expect difficulties of cutting costs.
The stock remains up just 5% this year, against a 16% gain in the 25-component STOXX Europe tech index of which it is a member.
($1 = 0.9008 euros)
