Nokia's third-quarter results today showed there could be a light at the end of the tunnel for the ailing Finnish handset manufacturer.

Yes, the company posted a loss, and yes, smartphone sales showed marked declines, but the numbers were better than many had feared.

Nokia lost Euro 68 million, or $94 million, as its handset sales dropped 25 percent in the third quarter. Analysts had expected the losses to be considerably worse. Overall sales including revenue from Navteq and Nokia Siemens Networks dipped 13 percent to $12.34 billion.

"In Q3 we started to see signs of early improvement in many areas, but we must continue to focus on consistent progress," Nokia CEO Stephen Elop said in a statement.

Smartphones were hit the hardest, with shipments dropping 38 percent to 16.8 million from 27.1 million during the same period last year. Shipments of Nokia's lower-end handsets rose slightly to 89.8 million, but it was not enough to overcome downward trends in its more lucrative smartphones.

Nokia's overall device volumes dipped 3 percent over last year to 106.6 million units as its waning popularity in Europe, China and Latin America offset increases in the Middle East, Africa and Asia-Pacific.

The results seem to indicate that Elop's turnaround strategy could be working. Elop decided last spring to ditch the company's lagging Symbian operating system for Microsoft's Windows Phone 7 and announced a major restructuring that sent Nokia's Symbian business to Accenture and will lay off thousands of employees. The job cuts are expected to help cut $1.5 billion from Nokia's operating expenses by 2013.

The big test for Elop's plan will come later this year, when Nokia debuts its first Windows Phone 7 devices. Nokia's new phones will face considerable competition from Android smartphones and the iPhone, which are solidly entrenched with consumers.

Elop said the new smartphones would be available in "select countries" later this quarter. Nokia will then "systematically increase" the availability of the smartphones over the course of next year.