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Nokia sets sights on reviving wireless network sales

A man walks in front of the Nokia Solutions and Networks (NSN) building in Oulu November 19, 2013. REUTERS/Ando Ritsuko

HELSINKI (Reuters) - Nokia reported a 22 percent fall in sales at its core NSN network equipment division on Thursday, highlighting the problems facing management once it completes the sale of its former flagship phones business to Microsoft for 5.4 billion euros (4.4 billion pounds).

Nokia said that Nokia Solutions and Networks sales fell to 3.1 billion euros in the fourth quarter from a year earlier, just shy of the average forecast of 3.2 billion euros given in a Reuters poll of analysts.

Nokia shares were down 4.2 percent at 5.48 euros by 1153 GMT.

The company said it expected to embark on a sales growth drive later this year for NSN while maintaining its operating margin at the higher end of its targeted long-term range of 5 to 10 percent and despite expectations for the margin in the first quarter of 2014 to fall to around 5 percent due to seasonal factors.

NSN's operating margin last year rose to 9.7 percent from 5.7 percent in 2012.

NSN turned profitable in 2012 after slashing costs and shedding unprofitable businesses, helping to offset losses in its ailing mobile phone business.

While NSN's operating margins have been strong, analysts have said it now needs to concentrate on winning more business as high research and development costs in mobile broadband technology mean bigger players have an advantage.

Despite the growth challenges for NSN, however, the results showed the company in strong financial health without the handset business, where Nokia reported an adjust operating loss in the fourth quarter of 191 million euros on sales down 29 percent.

(Reporting by Ritsuko Ando; Editing by Balazs Koranyi and Greg Mahlich)