An upbeat financial report from Nokia on Thursday helped erase some of the gloom and doom that had been hanging over the mobile phone handset market. Excluding special items, the firm's profits climbed 8% to $2.18 billion.

Already the world's largest handset provider, Nokia said it shipped 122 million units in its second quarter, extending its market share to 40% from 38% last year. The company said it expected to grow its share even more in the future.

However, restructuring costs, a slowing global economic situation, and special items caused the company to report a 61% drop in profits. In early trading after the release of the financial report, Nokia's stock jumped 8%.

"Looking at the rest of the year, we are optimistic and have had good feedback about the broad range of new products we expect to sell in our device business," said Nokia CEO Olli-Pekka Kallasvuo, in a statement. "In the second quarter, we saw good momentum in the early stages of our services and software business and we believe that the next wave of growth will be driven by devices linked with services."

Nokia said its services and software net sales were up 42% sequentially.

The firm's generally positive financial report came as other major handset providers prepared to release their reports in the coming days. Sony Ericsson earlier surprised the handset universe with a warning that soft European demand for handsets was depressing sales. Sony Ericsson is scheduled to release its financial report Friday.

Noting that the average price of a Nokia handset dropped to $117 from $143 in the previous year's second quarter, the firm estimated the industry's mobile device volumes at 303 million units -- up 15% year on year and 3% sequentially.

The company noted that its infrastructure equipment operation -- Nokia Siemens Networks -- recorded a operating profit margin of 6.7% in the quarter. "Nokia Siemens Networks delivered a second quarter with good net sales growth and improved profitability," said Kallasvuo.