* Group Q4 EBIT 524 mln euros vs analysts' forecast of 510 mln
* Network unit posts better than expected EBIT, margin
* Proposed dividend of 0.14 euros below market forecast
* Shares fall 2.5 pct (Adds comments on business margins and outlook; details)
By Jussi Rosendahl and Eric Auchard
HELSINKI/FRANKFURT, Jan 29 (Reuters) - Nokia on Thursday reported strong profits at its core Networks business on the back of surging North American sales, but the shares fell back over an uncertain outlook, higher costs in its Technologies division and a disappointing dividend.
The Finnish company, which sold its former flagship phones business to Microsoft last year, also increased its dividend by less than some analysts had predicted.
The shares were down 2.5 percent at 6.97 euros by 1257 GMT, taking the price back to last week's level.
Nokia's Technologies unit, which contains its patents, brand licensing and new product design businesses, showed a quarterly operating profit of 77 million euros, well below forecasts.
This was partly tied to the cost of developing the Nokia N1 Android tablet, its first brand-licensed device since selling the phone unit which was launched in November and is designed to rival Apple's iPad Mini.
The company repeated it expects operating margins for the Networks division to recede this year to its long-term target range of 8 to 11 percent, a decline from the 12.2 percent it reported in 2014.
"Last year was exceptionally good for Networks but the company did not provide any support for this to be the case this year," said Nordea analyst Sami Sarkamies, who has a sell-rating on the stock.
However, other analysts said that Nokia typically provides conservative guidance that gives room to raise its forecast over the year and noted that the stock price remains 36 percent up from a year ago.
Fourth-quarter operating profit at the company's mainstay networks unit, which ranks third in the global mobile equipment market after Ericsson and Huawei HWT.UL>, rose to 470 million euros ($530 million) or 14 percent of sales, a rise of 35 percent from 397 million euros in the year-ago quarter.
Analysts in a Reuters poll had on average expected a profit of 415 million euros and a margin of 12.4 percent.
Nokia said the growth in the Networks business was due to a surge in sales in North America, where revenue was up 95 percent on a year ago on demand from most of its U.S. and Canadian customers, including increased business from expanding U.S. network operators T-Mobile US and Sprint.
This contrasted sharply with its biggest rival, Sweden's Erisson, which suffered a 7 percent sales decline last quarter in North America as its major customers, Verizon and AT&T contained spending.
The networks unit saw modest growth of 4 percent in Europe, Middle East and Africa, but only 1 percent growth in fast-growing Asia Pacific markets.
"What we need to see is a mix of sales now from where the future growth in this market is coming from in Asia, Latin America and Africa," Gartner industry analyst Sylvain Fabre said. Nokia must be prepared to face low-cost rival Huawei, which has been barred from North American markets, he noted.
Chief Executive Rajeev Suri said Nokia was focused on growth in 2015, following years of serial restructuring: "While 2014 was a year of reinvention, we see 2015 as a year of execution."
"As we pursue ... opportunities, we will not shy away from investing where we need to invest."
Nokia had net cash of 5 billion euros at the end of 2014 after the 5.6 billion-euro sale of the handsets business to Microsoft, which was completed in April.
Some analysts said Nokia's move to conserve its cash pile by proposing a smaller dividend increase, could mean it is preparing for a major merger deal. Speculation was revived by a media report last month that Nokia might be back in talks about such a deal with networks rival Alcatel Lucent.
($1 = 0.8868 euros) (Additional reporting by Anna Ercanbrack in Helsinki; Editing by Greg Mahlich)