The North American market continued to bedevil Nokia as the world's dominant handset supplier maintained its dominance in most of the world's markets but slipped in the United States and Canada.

In announcing its first-quarter financial report Thursday, the Finland-based company said demand in emerging markets propped up its sales and earnings, but it indicated that its North American business is suffering.

"The overall device market developed as expected," CEO Olli-Pekka Kallasvuo said in a statement. "The greatest demand [is] in emerging markets, where our position is very strong. While we will not have major new products shipping in the second quarter, we expect a number of new products to be shipping and to have a positive impact on our results in the second half of 2008."

Nokia said its net profit hit $1.95 billion in the quarter -- up about 25% over the year-earlier period. Revenue was about $20 billion in the quarter.

Nokia, which ships more handsets than its next three competitors combined, has suffered in the U.S. market from a lack of CDMA EV-DO mobile phones. However, it is planning to use the emerging Long Term Evolution standard to help crack the North American market.

Nokia also pointed to weakness in the U.S. dollar as a potential problem. "The change from our previous estimate of value growth for this market primarily reflects the negative impact of the recently weakened U.S. dollar, the general economic slowdown in the U.S., and possibly going forward some economic slowdown in Europe," the company said.

Neil Mawston, director of Strategy Analytics, noted that in addition to its "lackluster CDMA handset portfolio," Nokia's "weak relationships with some major operators have caused its market share in North American to collapse." Mawston added that Nokia's North American market share has plunged from 20% to 7% in two years.

Nokia, whose worldwide handset market share has hovered around 40% in recent months, expects to increase its market share during 2008.