Nokia on Thursday reported that its worldwide mobile phone market share reached 40% in the fourth quarter of last year, but the company's share declined in North America compared with other regions.

Nokia remains the leading phone maker in the world, but its increase in market share from 36% in the fourth quarter of 2006 to 40% in the fourth quarter of last year is due to because of substantial growth in the Middle East and Africa, and modest growth in Europe, Asia-Pacific, and Latin America, the phone maker said.

In North America, Nokia's market share dropped to 5.1% in the fourth quarter, compared with 5.9% in the same period in 2006. The phone maker recently said it will roll out six to 12 new phones specifically for the U.S. market this year in order to regain its North American market share. For example, Nokia already announced that it will begin selling the 8-GB version of its N95 multimedia phone in the United States.

Nokia's mobile phone volumes in the fourth quarter were constrained because of component shortages resulting from high demand for Nokia products, the company said.

Nonetheless, Nokia's mobile phone net sales grew 5% to 7.4 billion euros (about $10.9 billion), compared with 7.1 billion euros (about $10.5 billion) in the fourth quarter of 2006. Nokia also said it dropped its average selling price from 89 euros (about $131) in the fourth quarter of 2006 to 83 euros (about $123) in the fourth quarter of last year, and sold more entry-level phones.

Earlier this week, Nokia introduced two new mobile phones for emerging markets -- the 2600 classic and the 1209 -- both priced at less than $100. Nokia already started shipping the 2600 classic, which will cost 65 euros (about $95), and it will become available during the first quarter of this year. The 1209 will cost 35 euros (about $50) and will become available globally in the second quarter of this year.

Overall Nokia had a successful last quarter in which net income rose to 1.8 billion euros ($2.7 billion) from 1.3 billion euros (about $1.9 billion) a year earlier, according to the company.

Meanwhile, Motorola -- the No. 1 phone maker in the United States -- reported a drop in net income this week. Motorola's fourth-quarter net income fell 84% to $100 million from $623 million a year earlier. Revenue also declined 18% to $9.65 billion from $11.79 billion. Motorola blamed the decline on problems in its mobile handset division.