Aug. 2 (Bloomberg) -- Nokia Oyj, the world's biggest maker of mobile phones, said profit more than doubled and sales rose the most in five quarters as the company took market share from Motorola Inc.

The stock advanced to a five-year high. Second-quarter net income rose to 2.83 billion euros ($3.87 billion), or 72 cents a share, after a one-time gain from the creation of a networks venture with Siemens AG. Profit beat analysts' estimates. Revenue climbed 28 percent to 12.6 billion euros, Espoo, Finland-based Nokia said today.

Chief Executive Officer Olli-Pekka Kallasvuo said Nokia's market share rose to 38 percent and handset margins were the highest in three years. The new N95 and 6300 phones outsold models from Motorola Inc., which lost money in the period. Kallasvuo today brought forward by two years a plan to save 1.5 billion euros annually at the network unit by cutting 9,000 jobs.

``Nokia has turned their increased market share into an earnings machine,'' said Marko Alaraatikka, a fund manager at Evli Asset Management in Helsinki, which oversees about $8.2 billion including Nokia stock. ``The margins were amazing.''

Shares of Nokia jumped 1.69 euros, or 8.2 percent, to 22.30 euros in Helsinki, the biggest gain since January 2004. They have gained 44 percent this year, the best performance in the industry and giving Nokia a market value of 87.7 billion euros.

Swelling Margins

Nokia, which sells about 13 cellular phones every second, said all three handset units, known as mobile phones, multimedia and enterprise solutions, improved their operating profit margins, both from a year earlier and sequentially.

Nokia benefited as Motorola failed to unveil a successor to its bestselling Razr model and retreated from competing on price in emerging markets such as China. Schaumburg, Illinois-based Motorola posted a second straight quarterly loss last month.

The company said it had 38 percent of the market in the quarter, up from 36 percent in the previous three months and a gain from 34 percent a year earlier. The company forecast it will increase its market share this quarter from the second quarter.

Nokia's global market share rose to 39.1 percent in the second quarter, researcher Strategy Analytics Ltd. said today. Suwon, South Korea-based Samsung Electronics Co. increased its share to 14.5 percent, overtaking Motorola as the world's second- largest handset maker. Motorola had a 13.8 percent market share.

``Their market share is bigger than the next three combined,'' said Alaraatikka at Evli.

Network Venture

The company had been expected to post a drop in net income to 1.05 billion euros, or 27 cents share, from 1.14 billion euros, or 28 cents, a year earlier, the average analyst estimates compiled by Bloomberg. Sales were seen at 13 billion euros.

The profit estimate didn't include a 1.88 billion-euro gain stemming from a non-cash accounting adjustment as the Nokia Siemens venture was consolidated after it began in April.

Earnings excluding one-time gains or losses rose to 32 cents a share from 23 cents a year earlier, beating the average estimate of 43 analysts in the survey.

The network venture had sales of 3.44 billion euros and an operating loss of 1.3 billion euros. It booked a charge of 905 million euros for job cuts and 297 million euros for other acquisition-related costs, amortization and inventory adjustment.

Network Forecast Cut

The unit also cut its outlook, saying it no longer expects to achieve ``double-digit'' operating profit margin by the end of the company's first year of operations. Profitability should improve in the second half.

``I'm disappointed with Nokia Siemens Networks, the company clearly underperformed the market,'' Kallasvuo said on a conference call. He announced a second cost-cutting program for the network business aimed at saving an extra 500 million euros.

Nokia and Munich-based Siemens agreed last year to merge their units making base stations and switches for wireless and fixed-line phone networks.

The venture ranks third behind market leaders Alcatel-Lucent and Stockholm-based Ericsson AB.

Alcatel-Lucent, created last year when France's Alcatel SA bought Lucent Technologies Inc. of the U.S., posted a second straight quarterly loss this week and second-quarter profit at Ericsson rose less than analysts had expected.

New Handsets

To bolster its product range, Nokia introduced seven new handsets in May, including a slim phone known as ``Barracuda,'' for emerging markets. The devices cost 35 euros to 90 euros each, and the first in the range became available last quarter. It also announced mid-priced models with high-speed Internet access including the Classic 6500, Nokia's slimmest phone to date.

``The performance of our handset business was simply excellent,'' Kallasvuo said.

More than nine out of 10 people in Western Europe have a mobile phone, meaning growth in the region is mainly made up of replacement phones where new features drive demand. In India, less than one-fifth of the population has a mobile phone.

Nokia's new high-end products include the 550-euro N95, which features satellite navigation and a 5-megapixel camera, and the slim, steel-skinned 6300 model. Both helped stabilize average selling prices and counter the effect of increased sales of cheaper handsets in emerging markets.

The average selling price of a Nokia phone stood at 90 euros in the quarter, up from 89 euros in the previous quarter and down from 102 euros a year earlier. Analysts had expected 90 euros.

101 Million

The Finnish company shipped 101 million devices during the quarter, a 29 percent increase from a year earlier and an 11 percent gain sequentially. Unit sales jumped 36 percent in China and in the Asia-Pacific region, which includes India, from a year earlier. Unit sales in Europe rose 28 percent year-on-year. North American sales dropped 21 percent from a year earlier and decreased 15 percent from the first quarter.

Nokia raised its forecast for the global handset market, saying it will rise 10 percent or more from 978 million units sold in 2006, when growth topped 20 percent. It had previously estimated growth of as much as 10 percent.

The company predicts there will be 4 billion mobile subscribers by 2010, with growth mainly coming from emerging markets in the Asia-Pacific region. Mobile-phone replacement already accounts for more than half of Nokia's total sales in emerging markets. China is the biggest single market for the company as a whole and for its most expensive multimedia phones.

To contact the reporter on this story: Juho Erkheikki in Helsinki at jerkheikki@bloomberg.net.

Last Updated: August 2, 2007 12:26 EDT