By Tarmo Virki
Shares in Nokia jumped on the surprise profit number, up 9.3 percent to 4.9 euros, their highest level since May.
Nokia, which is preparing to fight its way into the smartphone market with the launch of its first Windows phones next week, said it sold 89.8 million basic mobile phones compared to expectations for 67.0-89.7 million.
Protecting its position in markets like India is crucial for Nokia as rivals like Apple push in with cheaper smartphones.
The struggling Finnish handset maker reported third quarter underlying earnings per share of 0.03 euros, compared with a forecast loss of 0.01 euros in a Reuters poll of analysts and a profit of 0.14 euros a year ago.
"The results were clearly better than expected. The mobile phones volumes shipped had the biggest role, also the smartphone volumes were on a higher level than expected," said Swedbank analyst Jari Honko.
"It seems that Nokia is further into a recovery, or rebound, than had been expected. Fourth quarter guidance signals that this trend will continue," Honko said.
Nokia forecast fourth quarter underlying operating profit margin of 1-5 percent in its key phone business.
Nokia, left in the dust by Apple <AAPL.O> and Google <GOOG.O> in the booming smartphone market, will introduce its first new models using Microsoft's <MSFT.O> Windows Phone platform next week in London.
It unveiled the Microsoft deal in February and has since struggled with a fast decline in smartphone sales as it has tried to sell models using its old Symbian platform.
(Editing by Sophie Walker and Chris Wickham)