As expected, Nokia Corporation (ADR) (NYSE:NOK)‘s sales, revenue, and income dropped in its recently announced Q1, both sequentially, and compared to last year. And, based on market reaction, it’s going to be a long day for Nokia shareholders — or, at least, those with a near-term perspective. For Fools with a longer-term view, a Nokia sell-off may turn out to be a great buying opportunity.

The results are in

As the dust settles from Nokia Corporation (ADR) (NYSE:NOK)’s Q1 earnings report, you’re likely to see headlines screaming “Nokia Sales Fall,” or some derivative thereof. And lower total revenues, and shrinking mobile phone sales, did take their toll on Nokia in Q1, as expected.

Nokia’s net loss of $0.09 a share was a marked improvement compared to the year-ago quarter’s loss, but fell well short of Q4 2012’s $0.07 a share profit. Overall, net sales really took a beating; down 20% from last year, and 27% from Nokia’s Q4 revenues of $10.48 billion. Nokia bears are sure to focus on sales and sinking profits after they digest the earnings news. But there’s more to Nokia’s quarter than meets the eye.

Another perspective

Nokia Corporation (ADR) (NYSE:NOK) reports financial results based on IFRS accounting standards, just as U.S. companies follow GAAP accounting principles. A closer look at Nokia’s results, after removing a myriad of one-time charges and expenses, tells a different story of Nokia’s 2013 Q1 performance.

Non-IFRS results in Q1 showed underlying profitability as a whole, and in Nokia’s critical Devices unit, which includes the all-important Lumia smartphone. Though revenues were down, Nokia CEO Stephen Elop’s efforts to reduce expenses are beginning to take hold, which drove another quarter of profit.

Nokia Corporation (ADR) (NYSE:NOK) gave up market share in China in Q1 as it shifts its focus to its partnership with China Mobile Ltd. (ADR) (NYSE:CHL) and its Chinese-compliant smartphone, the Lumia 920T. Keep an eye on Nokia’s sales in the all-important Chinese market in Q2, when we should begin to see the impact of the Nokia/China Mobile Ltd. (ADR) (NYSE:CHL) partnership. With China Mobile Ltd. (ADR) (NYSE:CHL)’s 700 million subscribers, and an agreement to subsidize Lumia phones for its customers, the largest wireless carrier in the world could really jump-start Lumia sales by next quarter.

Three things to hold onto

Three areas of Nokia Corporation (ADR) (NYSE:NOK)’s recent earnings report were especially promising: available cash, Nokia Siemens results, and the number of Lumias sold in Q1. The 3% improvement in net cash over last quarter demonstrates Nokia isn’t bleeding money; in fact, it’s growing its coffers, even as revenues decline. Nokia Siemens significantly helped net cash on-hand rise to EURO 4.5 billion in Q1. The division continues to crank out stellar margins and positive cash flow, keeping the Nokia engine running.

Nokia’s future is riding on the Lumia smartphone and Microsoft Corporation (NASDAQ:MSFT)‘s Windows 8 OS. Compared to Apple Inc. (NASDAQ:AAPL)‘s iOS and Google Inc (NASDAQ:GOOG)‘s Android market share, widespread adoption of Windows 8 leaves much to be desired. But, as noted in a recent article, if a smartphone that runs Windows 8 is sold anywhere in the world, there’s an 80% chance it’s a Nokia. Clearly, it behooves Microsoft Corporation (NASDAQ:MSFT) to support Nokia smartphone sales any way it can as the two work to gain market share. There are worse friends to have than deep- pocketed Microsoft, which reported $68 billion in cash ahead of the fiscal Q3 results it will announce after today’s close.

Following Nokia Corporation (ADR) (NYSE:NOK)’s impressive 2012 holiday season sales of 4.4 million Lumias, Q1’s most important question was whether Lumia sales momentum continued. Nokia’s answer: a resounding 27% improvement from Q4 results, improving to 5.6 million units for the quarter.