Nokia likely netted $600 million plus in Apple patent settlement

Nokia likely netted $600 million plus in Apple patent settlement

Summary: Nokia likely extracted a one-time $608 million payment from Apple as the companies settled their patent litigation, but the long-term health of the company depends on products not royalties, say analysts.

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Nokia likely extracted a one-time $608 million payment from Apple as the companies settled their patent litigation, but the long-term health of the company depends on products not royalties.

Following news that Nokia settled its patent litigation with Apple, which is now licensing patents from its rival, analysts quickly moved to figure out the revenue impact. Nokia said that Apple's payment will boost dismal second quarter results. Related:

Deutsche Bank analyst Kai Korschelt said in a research note that Nokia is likelty to get a 420 million euro payment in the second quarter. That sum, which translates to $608 million, assumes a 1 percent royalty rate on all 110 million iPhones sold up until the first quarter at an average selling price of $550 million.

That figure is roughly in line with historical patent cases. In March 2006, Research in Motion paid NTP a $612.5 million to settle litigation. Nokia paid Qualcomm $2.3 billion in 2008. Meanwhile, Qualcomm agreed to pay Broadcom $891 million over 4 years in April 2009. Samsung and LG both agreed to pay Kodak big patent bucks in Dec. 2009 with settlements of $550 million and $414 million respectively.

Recurring revenue payments for Nokia will probably come out to 95 million euros, or $137.6 million, a quarter, said Korschelt.

Morgan Stanley analyst Patrick Standaert said that Nokia's quick win doesn't change the long-term picture.

The patent litigation settlement with Apple gives Nokia a profit stream of ongoing royalty payments and an indirect exposure to Apple’s success. However, Nokia is a product company and we need to see success in the new smartphone strategy to become more positive in the long term. Nokia's patent win does little for the long-term picture. Nokia still has to transition to Windows Phone 7 devices and keep some market share going forward.

Topics: Enterprise Software, Apple, Banking, Legal, Nokia

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  • RE: Nokia likely netted $600 million plus in Apple patent settlement

    Larry,

    An "average selling price of 550 million" doesn't look right to me, especially with sales of 110 million iPhones. Neither does the calculated average price of $5/iPhone.

    Cheers,

    --rj
    Roger_Jennings
    • RE: Nokia likely netted $600 million plus in Apple patent settlement

      @Roger_Jennings @Roger_Jennings I think the last part "of $550 million" is not to follow "the average selling price", but is probably meant to follow "a 1% royalty rate". Confusing sentence structure, perhaps.
      algotechie
      • As I said, it is nothing like nonsensical $11.5 per device rumour

        @algotechie
        DDERSSS
    • RE: Nokia likely netted $600 million plus in Apple patent settlement

      @Roger_Jennings I assume that 550 million is 1% of the turnover of which Apple pays royalties. The amount that will be paid to Nokia.
      rhon1
  • RE: Nokia likely netted $600 million plus in Apple patent settlement

    That's a lot of money they can invest into WP7.
    LoverockDavidson
    • RE: Nokia likely netted $600 million plus in Apple patent settlement

      @LoverockDavidson yuck!
      browser.
    • RE: Nokia likely netted $600 million plus in Apple patent settlement

      @LoverockDavidson They don't need any more money. MS is footing the bill aren't they.
      rpollard1
      • RE: Nokia likely netted $600 million plus in Apple patent settlement

        @rpollard@...
        Its a mutal agreement I'm sure.
        LoverockDavidson
    • RE: Nokia likely netted $600 million plus in Apple patent settlement

      @LoverockDavidson WP7 is a joke and Kin is the punchline. Microsoft NEEDED to throw cash at Nokia to make anything actually happen with it. Microsoft's approach has been to just inundate with cash to get people to make their phones because no one wants them.
      snoop0x7b
      • RE: Nokia likely netted $600 million plus in Apple patent settlement

        @snoop0x7b
        Is that why WP7 phones sold out in some parts of the world?
        LoverockDavidson
      • RE: Nokia likely netted $600 million plus in Apple patent settlement

        @LoverockDavidson

        Because very few were made, and even fewer shipped to stores.
        DeusXMachina
      • RE: Nokia likely netted $600 million plus in Apple patent settlement

        @snoop0x7b

        Since you clearly have never owned or at least used any WP7 phone we know which orifice you are speaking from.
        Raid6
      • RE: Nokia likely netted $600 million plus in Apple patent settlement

        @Raid6: I've tried one in a store. I was impressed with a few of the features (I really liked being able to get to the camera from the unlock screen), when I tried it the platform wasn't really all that mature compared to Android or even iOS. I feel that they went backwards in a lot of ways, namely by throwing out a lot of what they learned from Windows Mobile... There are features that WM had that WP7 did not at the time have for example WP7 didn't launch with copy/paste, that's something every phone should have.

        When I tried it the droid sitting next to it had that feature...
        snoop0x7b
      • RE: Nokia likely netted $600 million plus in Apple patent settlement

        @LoverockDavidson If you make on piece of crap (not saying WP7 devices are) and somebody buys it that is selling out, not success or a hit.
        non-biased
    • RE: Nokia likely netted $600 million plus in Apple patent settlement

      They may want to keep it in the bank. This settlement gives Apple the right to use certain Nokia patents, but it curiously contains no cross-license, i.e. Nokia gets no license to any Apple patents. As Nokia moves out of the feature phone segment and into more sophisticated smartphones, it's going to find out that it's difficult to make a smartphone without tripping over an Apple patent.
      Robert Hahn
      • Yep, and that was the big thing that started the whole

        lawsuit: Nokia's demand that Apple cross-license in addition to the royalty, something demanded of no other cell pone maker.
        fr_gough
      • RE: Nokia likely netted $600 million plus in Apple patent settlement

        @Robert Hahn According to the New York Times, Nokia requested broad cross-licensing with Apple. But that usually costs, and Nokia needed the money. This had been going on long enough, and the end result is that Nokia gets cash, but licenses to only a few of Apple's many, many patents.

        It doesn't actually matter if Microsoft has cross licensing with Apple or not -- at least in the USA (land of the software patent), it's the hardware that violates the patent. So if Nokia's selling the hardware, they need the license, whether they're running MS's software or not. They might get around this if Microsoft actually sells the hardware.
        Hazydave
    • RE: Nokia likely netted $600 million plus in Apple patent settlement

      @LoverockDavidson
      Except WP7 isn't Nokia's.
      ZackCDLVI
    • RE: Nokia likely netted $600 million plus in Apple patent settlement

      @LoverockDavidson Fixed it for you ;-)

      [i]That's a lot of money they can piss away on WP7.[/i]
      non-biased
  • RE: Nokia likely netted $600 million plus in Apple patent settlement

    Somebody is getting paid.
    Droid.Incredible