Nokia Shares Slump After Patent Guidance Disappoints
February 01 2016 - 8:20AM
Dow Jones News
Shares in Nokia Corp. slumped Monday after the Finnish
telecommunications equipment maker issued guidance for its
intellectual-property portfolio following a patent deal reached
with Samsung Electronics Co., that left some investors
disappointed.
Nokia said that, including the Samsung award, it expects to
receive at least €1.3 billion ($1.4 billion) in cash between 2016
and 2018 related to settled and continuing arbitration regarding
its intellectual property.
Some investors had pinned their hopes on Nokia's large stable of
patents generating higher revenue and contributing substantially
more to earnings, with many recent buyers of the stock taking a
position solely related to the intellectual property portfolio,
said a telecommunications analyst, who declined to be named.
In midmorning trading in Helsinki, Nokia's shares had dropped
10% to be at €5.92 apiece.
Investor disappointment over the Nokia-Samsung settlement
highlights the challenge that telecommunication manufacturers face
in getting paid for their intellectual property at a time of stiff
competition and consolidation in the cellphone market. In addition,
the need to share technology standards has led to friction and
legal proceedings between network manufacturers and smartphone
makers over the fair use of some technologies.
The deal follows the resolution of a patent dispute between
Ericsson AB and Apple Inc., which reached an out-of-court
settlement in December. Apple agreed to pay an undisclosed amount
plus continuing royalties over seven years to use some of the
Swedish company's patents.
Samsung and Microsoft agreed to end a contract dispute a year
ago.
Nokia said earlier Monday that an arbitration panel has ruled on
how much the South Korean company has to pay as part of their 2013
licensing agreement, but didn't disclose the sum itself.
"The use of independent arbitration to resolve differences in
patent cases is a recognized best practice, and we welcome the
additional compensation payable to Nokia under the extended
agreement," said Nokia Technologies President Ramzi Haidamus.
The Finnish and South Korean companies agreed in November 2013
to a new licensing agreement, extending a previous deal through
2018 that allows them to use each other's patents, thereby
lessening the likelihood of lawsuits and related costs.
Nokia was set to receive more compensation from the South Korean
company than it received from a previous patent deal, but the
Espoo-based Finnish company agreed with Samsung that the exact sum
would be decided by arbitration.
Nokia has put its investment in research and development between
1984 and 2014 at more than €50 billion, with Nokia Technologies
managing a portfolio of 30,000 individual patents and patent
applications.
Nokia Technologies expects to report net revenue of around €400
million in the fourth quarter of last year and €1.02 billion for
the full year, Nokia said Monday.
Nokia agreed to sell its mobile handset business to Microsoft
Corp. in 2013.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
February 01, 2016 08:05 ET (13:05 GMT)
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