Today, Nokia settled a long-standing dispute with business partner Samsung over wireless technology licenses, netting a cool $2.5 billion ($2.32 billion EUR) in projected sales following the deal. Although the Finnish company, whose current bread and butter is technological licensing, is about to line its pockets with hundreds of millions of euros, investors are nevertheless displeased.
Nokia's share value fell a whopping 10% soon after the announcement, with Danske Capital analyst Juha Varis explaining that the company is unable to meet expectations of its patent portfolio generating more profit than rival Ericsson's. Moreover, the annualized sales run-rate for Nokia's patent unit after the Samsung settlement is about $866,272 million (800 million euros), while Ericsson (which signed with Apple recently) has a run-rate of about $1.3 billion (1.2 billion euros). Some investors criticized Nokia's communication of the settlement and expressed surprise over the scale of the price movement. They are "left wondering on the Technologies unit's actual topline forecast for 2016," said Varis.
Nokia is also expected to start talks over a new contract with Apple sometime in the coming years.
As for itself, Nokia hopes its patent pension will improve over the next years, which shall be aided by an ongoing dispute with LG, similar to that with Samsung, that the Finns are yet to settle. Nokia is also expected to start talks over a new contract with Apple sometime in the coming years.
Can these long-term promises turn investor frowns to smiles of content? We'll see when the time comes to talk results, rather than expectations.
via The Verge