The story behind Tribune's broken deal

At the end of 2007, real estate tycoon Sam Zell took control of Tribune Co. in a deal that promised to re-energize the media conglomerate. But the company struggled under the huge debt burden the deal created, and less than a year later, it filed for bankruptcy.

One of Chicago's most iconic companies — parent to the Chicago Tribune — was propelled into a protracted and in many ways unprecedented odyssey through Chapter 11 reorganization.

On Dec. 31, after four years, Tribune Co. finally emerged from court protection under new ownership, but at a heavy cost. The company's value was diminished, its reputation was tarnished and its ability to respond to market opportunities during its long bankruptcy was constrained.

Tribune Co.'s bankruptcy saga began as an era of superheated Wall Street deal-making fueled by cheap money was coming to an end. The company's tale is emblematic of the American financial crisis itself, in which a seemingly insatiable appetite for speculative risk using exotic investment instruments helped trigger an economic collapse of historic proportions.

Tribune reporters Michael Oneal and Steve Mills, in a four-part series that begins today, tell the story of Tribune Co.'s journey into and through bankruptcy, throwing a spotlight on the key decisions and missed opportunities that marked a perilous time in the history of the company, the media industry and the economy.

Read the full story, "Part one: Zell's big gamble," as a digitalPLUS member.
To view videos and photos and for a look at the rest of the series visit, chicagotribune.com/brokendeal.

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Lottery winner's body likely to be exhumed next week

He won the lottery, then he was poisoned to death. A judge's ruling Friday to have Urooj Khan's body exhumed could give his family and police answers about how cyanide got into his system.

A tearful relative said she hoped "justice will be served" after a judge quickly gave approval today to exhume the body of the million-dollar lottery winner who died of cyanide poisoning.

“We’ve been waiting for justice all this time,” said Meraj Khan, the sister of Urooj Khan. “I’m just so glad that justice will be served.”

Still, she said the thought of having her brother’s remains exhumed is distressing to the entire family. “This is not rest in peace,” she said. “But it’s an investigation, and hopefully the truth will come out.”

Khan died in July and his death was initially believed from natural causes. But after a relative raised concerns, comprehensive toxicological tests showed he had lethal levels of cyanide in his blood.

Judge Susan Coleman gave a quick OK to the request by the medical examiner’s office to exhume the body at Rosehill Cemetery on Chicago’s North Side. Court papers said the body was not embalmed, leading prosecutors to indicate it was “critical” to arrange for the remains to be exhumed as soon as possible.

In an affidavit, Chief Medical Examiner Stephen J. Cina said it was necessary to do a full autopsy to “further confirm the results of the blood analysis as well as to rule out any other natural causes that might have contributed to or caused Mr. Khan’s death.”

Authorities said the exhumation and autopsy could occur next week.

After the brief court hearing, Meraj Khan and her husband, Mohammed Zaman, were mobbed by reporters, cameramen and photographers.

Zaman said the last time they saw Urooj Khan was the day before his death. He came over to their house as usual, talked with their children and left. He seemed happy and healthy, Zaman said.

Meraj Khan recounted that at about 4 a.m. the next day, July 20, she was awakened by a phone call from her brother’s line. It was the first day of the Muslim holy month of Ramadan and she thought her brother was up early because of that. Instead, she said, she heard horrible screaming at the other end of the line.

“I couldn’t understand what was happening,” she said. “I heard screaming, and that’s all. So I woke him (Zaman) up. But I still don’t know who made that call.”

He died a short time later at an Evanston hospital.

“It’s hard for me to believe even now,” Meraj Khan said. “How could they do this, whoever did it?”

Meraj Khan and her husband said they could not comment on the police investigation, but they said they knew that at the time of his death, the only people in the home were Khan, his wife, Shabana Ansari, her father Fareedun Ansari, and Khan’s teenage daughter from a previous marriage.

Asked about IRS liens that had been placed against Fareedun Ansari, because of $120,000 in tax debt, Zaman said they were shocked to read about it in the Tribune this week. He said neither Urooj Khan nor Fareedun Ansari ever mentioned it to them.

Zaman said Fareedun Ansari had returned to live with his daughter and Khan last year after he’d moved to New Jersey to run a small convenience store that ultimately failed. He said Fareedun Ansari spent decades working for Urooj Khan’s father in India before coming to Chicago to help out with Khan’s growing dry cleaning and real estate businesses.

Meraj Khan, who last year was granted custody of her brother’s 17-year-old daughter, Jasmeen, said the girl is having a rough time dealing with the mystery surrounding her father’s death and all the recent media attention to the case.

“She’s very devastated. I’m trying to keep her cheerful, but it’s just very hard,” said Meraj Khan, choking back tears. “She’s 17. It’s very hard for her to cope with everything that’s going on.”

According to Cook County court records made public today, Khan’s first wife obtained multiple orders of protection as part of her 1998 divorce from him.

In one, Maria Jones alleged that Khan repeatedly had threatened to kill her and their daughter, then 4, if she filed for divorce. She also alleged he repeatedly physical abused her son from a previous marriage and contended she had to remove the boy from the home.

jmeisner@tribune.com

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Analysis: Nokia's results breakthrough buys it time and options

HELSINKI (Reuters) - Nokia's stronger-than-expected quarterly results mean the mobile phone maker now has breathing space and better options to help it claw back a place alongside Samsung and Apple in the smartphone market.

The Finnish handset maker, whose fall from market leader to loss leader was so bad its chief executive said two years ago it was on a "burning platform", may even be in a position to list or sell its Nokia Siemens Networks (NSN) arm at a premium, instead of having to auction assets cheaply as had been feared.

Nokia's improved performance also gives it time to carry on marketing the new Lumia handsets on which it is staking future smartphone success, which were launched in November and have recently gone on sale in crucial markets like China and India.

"Reasonable Lumia volumes and much better margins and guidance in devices could reframe the debate on the longterm sustainability of the handset manufacturing business," said Morgan Stanley analyst Francois Meunier.

NSN looks an attractive proposition both for public investors and private equity firms now that it is posting higher margins and profits on the back of cost cuts and improved sales of higher-margin network equipment gear to operators investing in faster 4G - "fourth generation" - wireless broadband.

NSN's underlying margin was between 13 and 15 percent in the third quarter, beating the forecast 8 percent and helping Nokia trounce market expectations when it posted numbers on Thursday.

Cash from the sale or listing of NSN could then be ploughed back in to investment in Lumia.

Michael Schroder at Finnish investment group FIM and other analysts estimate the business to be worth well above 5 billion euros, although Nokia owns only half of it and could also choose to retain a stake in it.

"A listing could happen sooner than markets expect," said Inderes analyst Mikael Rautanen, adding that he was surprised by the rapid turnaround at the unit which had been struggling to improve profitability. "Going back 6 months, no one would've believed it could have such good margins."

TIME TO GROW

Investors have been growing impatient in the two years since chief executive Stephen Elop announced Nokia's controversial switch to Microsoft Windows software with the statement that its home-grown platform was burning and a drastic change was needed.

With the two-year transition period identified then by Elop almost over, and Nokia's cash position worsening, some had started to make noises about Elop having to leave if no improvement could be identified soon.

Nokia's net cash fell to 3.6 billion euros in September from 4.2 billion in June. Its latest cash position, along with other final details of its fourth quarter results, is due January 24.

However analysts say Nokia's cash position is now less of a concern than a few months ago, helped also by an issuance of 750 million euros in convertible bonds. The company has also been hard at work selling off assets including its headquarters and pushing to win royalty payments on its vast patent portfolio.

Morgan Stanley's Meunier said the stronger performance may mean Nokia's liquidity improved by 550 to 650 million euros in the fourth quarter. He still recommends an "underweight" in the shares due to an uncertain earnings outlook.

If the market gains more confidence in the survival of Nokia's mobile phone business, analysts said, its shares could rise further.

Since Thursday's announcement, Nokia shares have jumped around 13 percent, but are still below some analysts' price targets.

The stock closed at 3.396 euros on Friday, below the 4.00 euro target by Nordea analyst Sami Sarkamies, who rates them a "buy".

Sarkamies has been studying various scenarios for Nokia's mobile phone business, ranging from a come-back in smartphones to worse outcomes. He said that even in the worst-case scenario of being forced to exit the mobile phone business by the strength of Google's Android phones, Nokia should be valued at 2.7 euros.

Sarkamies joked that Thursday's announcement was Nokia saying "leave me alone, I know what I'm doing" - a phrase coined by another Finnish great, Formula One driver Kimi Raikkonen last year as he brushed off his engineers' advice during the Abu Dhabi Grand Prix.

Raikkonen went on to win the race.

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Eager Chudzinski takes over new-look Browns

CLEVELAND (AP) — The Browns have always been a part of Rob Chudzinski's life. Now, he's the man in charge.

Chudzinski, who spent the past two seasons as Carolina's offensive coordinator, was introduced as the club's sixth fulltime coach on Friday, a once-in-a-lifetime opportunity for the 44-year-old who as a kid pretended he played tight end for the Browns during games in his backyard in Toledo, Ohio.

"It is a dream come true," Chudzinski said. "I can't wait to get started."

Chudzinski will inherit a young roster he'll try to develop into a contender with the Browns, who have lost at least 11 games in each of the past five seasons and made the playoffs only once since 1999.

Chudzinski previously worked as an assistant with the Browns, most recently as their offensive coordinator in 2008. Although he has no previous head coaching experience, owner Jimmy Haslam and CEO Joe Banner are confident they hired the best possible candidate available to turn their club into a consistent winner.

"I would not miss the chance for the world." Chudzinski said. "We're going to win here."

The Browns hauled their search to find the 14th coach in franchise history to Arizona and back. They talked to high-profile college coaches, NFL assistants and a fired pro coach who took a team to a Super Bowl.

None of them was hired.

Instead, Chudzinski became their pick.

"I believe we came back with the best coach for the Cleveland Browns," said Haslam, who flew to Charlotte, N.C. on Thursday night with Banner to offer Chudzinski the job. "He is one of the brightest young coaches in the business."

Chudzinski's first move will be to hire his staff. He will immediately meet with the assistants currently working for the Browns. Chudzinski would not comment on any possible candidates to become his coordinators. There are reports he is considering former San Diego coach Norv Turner to run his offense. Chudzinski worked for Turner with the Chargers.

"I have a plan in place," he said. "We're going to get a great staff. We have a young group of players. This is going to be about the process. Lots of people are worried about the end result, but this is going to be the right process to get us where we want to be."

Now that they've hired their coach, Haslam and Banner will focus on finding a new general manager to help pick players for Chudzinski, who will be involved in finding the GM.

The new coach — "Chud," as he's known to players and friends — worked with the Browns' tight ends in 2004 and was their offensive coordinator in 2007, when the team won 10 games — their most since an expansion rebirth in 1999. He was released when Romeo Crennel was fired in 2008.

Chudzinski said when he walked off the field after the final game that season he knew he would be coming back to Cleveland "someday, somehow."

Chudzinski replaces Pat Shurmur, another first-time coach when he was hired, who was fired on Dec. 31 after a 5-11 season. For the past two years, Chudzinski has worked with talented Panthers quarterback Cam Newton and resuscitated Carolina's offense, which was one of the league's worst before he arrived.

When Haslam and Banner embarked on their coaching search as 2013 began, the pair vowed they would wait as long as necessary to find "the right coach" for Cleveland. They promised to give their new coach final say over the roster and planned to pair him with an executive to help pick players.

Chudzinski wasn't seen by many as an option.

And then he became the choice.

Haslam said Chudzinski's passion for the Browns was a bonus, but he had all the credentials and characteristics they were looking for in a new coach.

"If Rob was from Plano, Texas, we would have hired him," Haslam said.

Chudzinski said he wants a team that attacks on both sides of the ball. He would not comment on any of Cleveland's players, and sidestepped a question about rookie Brandon Weeden, who had an uneven first season with the Browns.

Chudzinski interviewed with the team on Wednesday, when the club also visited with Cincinnati defensive coordinator Mike Zimmer. Chudzinski appeared to be a long shot for the job, not because he wasn't qualified, but because it was thought Haslam wanted to make a big splash with his first coaching hire.

However, Chudzinski wowed Haslam and Banner during his meeting and the team decided it was time to end its search in its second week. Haslam said 10 minutes into the interview that he nodded at Banner that they had found their man.

In his first season in Carolina, Chudzinski turned Newton, the No. 1 overall draft pick, loose and the Panthers set club records for total yards (6,237) and first downs (345). Carolina also scored 48 touchdowns after getting just 17 in the season before Chudzinski arrived. The Panthers jumped from last in the league in total yardage to seventh, the biggest improvement since 1999.

Haslam pointed out the Panthers scored 88 touchdowns the past two seasons. Cleveland scored 44.

Following last season, Chudzinski interviewed for head coaching jobs with St. Louis, Jacksonville and Tampa Bay before returning to Carolina.

In getting the Browns' job, Chudzinski was picked over Zimmer, Montreal Alouettes coach Marc Trestman, fired Arizona coach Ken Whisenhunt and Cardinals defensive coordinator Ray Horton. Whisenhunt was in Cleveland for a second interview on Thursday, and appeared to be the front-runner. The Browns also were expected to interview Indianapolis offensive coordinator Bruce Arians.

Chudzinski's hiring may have shocked some Cleveland fans, many of whom at fantasies about Nick Saban or Jon Gruden or Kelly brining his supersonic offense to the NFL.

But his selection is in keeping with at least one of Banner's past moves. When he was in Philadelphia's front office, Banner went outside the box and hired Green Bay assistant Andy Reid, a relative unknown who spent 14 seasons with the Eagles.

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Online: http://pro32.ap.org/poll and http://twitter.com/AP_NFL

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‘Smash’ season debut sneak peek begins Monday

LOS ANGELES (AP) — NBC is giving viewers a sneak peek at the new season of “Smash.”

Starting next week, the first hour of the drama’s two-hour season debut can be seen online and in the air — where it will be screened on American Airlines flights.

The “Smash” preview will be available through several outlets, including NBC.com, Hulu, iTunes, Amazon and Xbox and on demand. It will be shown on American’s domestic flights starting Tuesday.

“Smash,” set in the world of New York theater, stars Debra Messing, Christian Borle and Angelica Huston. Guest stars this season include Jennifer Hudson.

The sophomore drama begins its second season Feb. 5 on NBC. “Smash” is a nominee at Sunday’s Golden Globe awards for best musical or comedy series.

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Flu more widespread in US; eases off in some areas

NEW YORK (AP) — Flu is more widespread across the nation, but the number of hard-hit states has declined, health officials said Friday.

Flu season started early this winter, and includes a strain that tends to make people sicker. Health officials have forecast a potentially bad flu season, following last year's unusually mild one. The latest numbers, however, hint that the flu season may already have peaked in some spots.

Flu was widespread in 47 states last week, up from 41 the week before, the Centers for Disease Control and Prevention said on Friday. Many cases may be mild. The only states without widespread flu are California, Mississippi and Hawaii.

The hardest hit states fell to 24 from 29, with large numbers of people getting treated for flu-like illness. Dropped off that list were Florida, Arkansas and South Carolina in the South, the first region hit this flu season.

Recent flu reports have included the holidays when some doctor's offices were closed, so it will probably take a couple more weeks to know if the flu has peaked in some places or grown stronger in others, CDC officials said Friday.

"Only time will tell how moderate or severe this flu season will be," CDC Director Dr. Thomas Frieden said in a teleconference with reporters.

Nationally, 20 children have died from the flu. There is no running tally of adult deaths, but the CDC estimates that the flu kills about 24,000 people in an average year.

Flu vaccinations are recommended for everyone 6 months or older, and health officials say it is not too late to get vaccinated. flu reports.

Nearly 130 million doses of flu vaccine were distributed this year, and at least 112 million have been used. Vaccine is still available, but supplies may have run low in some locations, health officials say.

Hyrmete Sciuto, of Edgewater, N.J., got a flu shot Friday at a New York City drugstore. She hadn't got one in years, but news reports on the flu this week made her concerned.

As a commuter by ferry and bus, "I have people coughing in my face," she said. "I didn't want to risk it this year."

The flu vaccine isn't foolproof; people who get vaccinated can still get sick.

On Friday, CDC officials said a recent study of more than 1,100 people has concluded the current flu vaccine is 62 percent effective. That means the average vaccinated person is 62 percent less likely to get a case of flu that's bad enough to require a trip to the doctor, compared to people who don't get the vaccine.

That's in line with how effective the vaccine has been in other years.

The flu vaccine is reformulated annually, and officials say this year's version is a good match to the viruses going around.

Flu usually peaks in midwinter. Symptoms can include fever, cough, runny nose, head and body aches and fatigue. Some people also suffer vomiting and diarrhea, and some develop pneumonia or other severe complications.

Most people with flu have a mild illness. But people with severe symptoms should see a doctor. They may be given antiviral drugs or other medications to ease symptoms.

Some shortages have been reported for children's liquid Tamiflu, a prescription medicine used to treat flu. But health officials say adult Tamiflu pills are available, and pharmacists can convert those to doses for children.

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AP Science Writer Malcolm Ritter in New York contributed to this report.

___

Online:

CDC flu: http://www.cdc.gov/flu/index.htm

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'Smash' season debut sneak peek begins Monday

LOS ANGELES (AP) — NBC is giving viewers a sneak peek at the new season of "Smash."

Starting next week, the first hour of the drama's two-hour season debut can be seen online and in the air — where it will be screened on American Airlines flights.

The "Smash" preview will be available through several outlets, including NBC.com, Hulu, iTunes, Amazon and Xbox and on demand. It will be shown on American's domestic flights starting Tuesday.

"Smash," set in the world of New York theater, stars Debra Messing, Christian Borle and Angelica Huston. Guest stars this season include Jennifer Hudson.

The sophomore drama begins its second season Feb. 5 on NBC. "Smash" is a nominee at Sunday's Golden Globe awards for best musical or comedy series.

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U.S. to review Boeing 787 design, safety

Two new incidents involving the Boeing 787 Dreamliner have been reported in Japan -- a crack in the cockpit and an oil leak. Norah O'Donnell reports.

The U.S. Federal Aviation Administration said Friday it will launch a high-priority and comprehensive review of Chicago-based Boeing's new 787's critical systems, following a rash of malfunctions this week, such as a battery fire and fuel leaks. However, federal transportation officials also supported Boeing, saying repeatedly that the plane is safe.

"We are confident about the safety of this aircraft," said Federal Aviation Administrator Michael Huerta, adding that a priority in the review will be the plane's electrical systems. He said he would not speculate on how long the review would take.

The review, an unusual move for the FAA that will not ground planes or halt production of new 787s, will examine the plane's design, manufacture and assembly, said U.S. Transportation Secretary Ray LaHood.

"Through it, we will look for the root causes of recent events and do everything we can to make sure these events don't happen again," he said. "I believe this plane is safe and I would have absolutely no reservation of boarding one of these planes and taking a flight."

Boeing shares were down 2.5 percent in midday trading to $75.15.

The announcement comes amid yet more reports Friday of problems with the highly anticipated "Dreamliner" jet, including a cracked cockpit window and another oil leak on a Japanese carrier. They add to a rash of other reported problems this week, most seriously a battery fire on a parked 787 in Boston, an incident under investigation by the National Transportation Safety Board.

The plane model is in use in Chicago for temporary United Airlines flights between Chicago O'Hare and Houston. Chicago-based United has five other 787s in service domestically. "We continue to have complete confidence in the 787 and in the ability of Boeing, with the support of the FAA, to resolve these early operational issues," a United spokeswoman said. "We will support Boeing and the FAA throughout their review."

Next week, LOT Polish Airlines plans to begin operating the region's first regular flight on a 787 between O'Hare and Warsaw, Poland. That inaugural flight is still planned for Wednesday, a spokeswoman said. All told, Boeing has delivered 50 Dreamliners to customers around the world, many to Japanese carriers.

Aviation experts have said the planes are safe and that glitches are common on new models of planes, especially ones as revolutionary as the 787, which uses mostly composite materials instead of metals to create an aircraft that's more lighter, more fuel-efficient and more comfortable for passengers. However, other observers have said the concentration of problems in a short period and the media attention they garner is damaging the reputation of Boeing, which was already under scrutiny for delivering the Dreamliner to customers more than three years late. The plane's list price is about $207 million.

The latest problems came Friday, when Japanese carrier All Nippon Airways said a domestic flight from Tokyo landed safely at Matsuyama airport in western Japan after a crack developed on the cockpit windscreen, and the plane's return to Tokyo was cancelled.

"Cracks appear a few times every year in other planes. We don't see this as a sign of a fundamental problem" with Boeing aircraft, a spokesman for the airline said. The same airline later on Friday said oil was found leaking from an engine of a 787 Dreamliner after the plane landed at Miyazaki airport in southern Japan. An airline spokeswoman said it later returned to Tokyo after some delay. No one was injured in either incident.

Boeing said Friday the 787 logged 50,000 hours of flight, with more than 150 flights occurring daily, and that its performance has been on par with the Boeing 777, which it calls "the industry's best-ever introduction" of a new airplane. "More than a year ago, the 787 completed the most robust and rigorous certification process in the history of the FAA," Boeing said in a statement. "We remain fully confident in the airplane's design and production system."

Ray Conner, president and chief executive officer of Boeing Commercial Airplanes, said Friday that the recent problems were not caused by Boeing's outsourcing of production or by ramping up production too quickly.

"We are fully committed to resolving any issue that affects the reliability of our airlines," he said.

gkarp@tribune.com

Reuters contributed
 

BA data by YCharts

BA data by YCharts

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Wife of poisoned lottery winner: 'No one would dare kill him'

The wife of Urooj Khan – the million-dollar lottery winner who died of cyanide poisoning – said today that Chicago police detectives had questioned her about the ingredients she used in preparing her husband’s last meal.

Khan’s wife, Shabana Ansari, said she also believed that police had seized food from the family home during a search after toxicological tests showed her husband had died from lethal levels of cyanide.

Ansari and her father, Fareedun, said that both of them as well as Khan’s daughter shared a lamb curry meal with Khan on the night he died last July.

Shabana Ansari said she is having a hard time believing that anyone would poison her husband.

“He was such a nice person,” she said. “No one would dare kill him.”

Fareedun Ansari, who identified himself as both Khan’s uncle and father-in-law, said he was present when Khan scratched off the million-dollar winning ticket last summer, weeks before his death. He said he was thrilled for him to win.

“He told me: ‘Uncle, I win everything. Now I don’t have any more dues (debts),’” Fareedun Ansari said. “I was happy. I was happy.”

Asked about the death of his son-in-law, Fareedun Ansari said, “I’m terribly sad, terribly sad.”

Shabana Ansari made a reference to a probate court fight over the lottery winnings when she was asked if the million dollars led to fighting in the family.
 
“Not exactly a fight,” she said.

When a reporter pointed out that Khan’s brother, in court papers, had voiced concern that Khan’s teenage daughter from a previous marriage share in the lottery winnings, Shabana Ansari said she fully intended to be sure her stepdaughter was not left out of the inheritance.

“How would I do such an injustice?” said Ansari, who was married to Khan for 12 years. “I was taking care of her all these years.”

asweeney@tribune.com

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Lumia sales lift Nokia results and turnaround hopes

HELSINKI (Reuters) - Nokia said strong sales of Lumia smartphones helped its mobile phone business achieve underlying profitability in the fourth quarter, raising hopes the struggling handset maker may be past the worst.

The Finnish company, which has been losing market share to Samsung and Apple, said the better-than-expected result was also helped by cost cuts, a stronger-than-expected performance from its Nokia Siemens Networks unit and 50 million euros ($65.2 million) in patent royalties.

The surprise announcement lifted the shares to nine-month highs and eased pressure on Chief Executive Stephen Elop, who has been trying to prove his February 2011 decision to switch to Microsoft Windows software was the right one.

Elop was seen to be running out of time after saying that the transition would take two years. Success of the high-end Lumia smartphones has been considered crucial for the company's survival, and investors had said Elop would need to quit or change strategy if sales did not pick up by early 2013.

"We're very pleased with the Lumia response," Elop told analysts, although he added that sales of the latest 920 models, which use the new Windows Phone 8 software, had been constrained by a shortage of supplies.

Nokia estimated fourth-quarter operating margin in its mobile phone business was between break-even to 2 percent. It previously forecast the margin to be around minus 6 percent.

Official results, including more details on its profit and cash position, are due on January 24.

Fourth-quarter net sales in devices and services were about 3.9 billion euros ($5.09 billion), Nokia said. It sold a total of 86.3 million devices. Smartphones accounted for 6.6 million units, of which 4.4 million were the Windows-based Lumia handsets.

Nokia shares rose 10.8 percent to 3.32 euros as some investors cheered the rare positive announcement from Nokia and traders scrambled to cover their short positions.

Nokia had 17 percent of shares out on loan, according to Markit data, making it one of the most "shorted" stocks in Europe.

STILL NEED EVIDENCE

The company said that conditions remained tough despite the stronger-than-expected fourth quarter, and forecast its margin to be around minus 2 percent in the first quarter of this year.

"We continue to operate in a competitive environment with limited visibility," Elop said.

Some analysts were skeptical about the success of the Lumia strategy. Nokia would not say how many of the Lumias it sold were the newest models rather than the heavily discounted ones launched earlier.

Many also noted Lumias sold in the fourth quarter still make up a small portion of global smartphone sales in the same period, estimated at over 200 million.

"4.4 million Lumias sold is not yet a promise of a turnaround," said Inderes analyst Mikael Rautanen, who had just downgraded the shares to "sell" on Tuesday.

Bernstein analyst Pierre Ferragu said he was still negative about the shares, rating them "underperform".

"Last year, in order to sustain Lumia volumes, Nokia had to cut prices very rapidly, driving gross margins close to zero. We believe this will repeat this year," he said.

Redeye analyst Greger Johansson said it was too early to call it a turnaround.

"They will have to prove a lot more until you can say that," he said. "I'm not still convinced that they are going to manage to succeed with those new smartphones. They have to sell a lot more in volumes until you can say that."

($1 = 0.7667 euros)

(Additional reporting by Terhi Kinnunen and Sudip Kar-Gupta; Editing by David Goodman and Sophie Walker)

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