Nokia, which has a significant presence in India, had raked in a profit of 948 million euros in the year-ago period.
The Finnish entity is battling to increase its share in the fast-growing smartphones market, which is dominated by Apple. Apart from Apple's offerings, Google's Android-based phones are also eating into Nokia's market pie.
However, Nokia's revenues in the 2010 December quarter surged to 12.65 billion euros from 11.98 billion euros in the same period a year ago.
Nokia CEO Stephen Elop in a statement said that growth trends in mobile devices market continue to be encouraging.
Striking a cautious note, he said that Nokia "faces some significant challenges in our competitiveness and our execution. In short, the industry changed, and now it's time for Nokia to change faster".
According to the statement, the firm's market share dropped to 32 percent last year from 34 percent in 2009.
However, in 2010, Nokia's "total mobile device volumes reached 453 million units, representing an increase of five percent year-on-year".