Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) shares shot up around 60 percent following the announcement of a deal on September 3rd. This reflects the extent of negative value associated with the company’s handset business, according to Credit Suisse analysts (Kulbinder Garcha, Achal Sultania, Talal Khan, Matthew Cabral, Ray Bao and Andrew Ruben). Analysts note that Nokia will be a much more stable organization provided the deal concludes in the first quarter of 2014.
After reviewing Nokia's three business segments, analysts are of the belief that there is a potential for further value creation, primarily in the IPR segment. Overall, shares of the Finnish firm may still rise another 25 percent from the current levels, according to analysts.
Nokia IPR portfolio a gem
Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) no doubt has a strong IPR portfolio, which reflects from the patent agreement deals it has with Apple Inc. (NASDAQ:AAPL), BlackBerry and QUALCOMM, Inc.(NASDAQ:QCOM). Since Nokia has no handset business now, these patents can be used further to create more value in multiple areas, believe analysts.
Presently, Nokia is not licensing to all the players in the mobile market, which presents an opportunity as the company can now partner with vendors in China, Korea, and Japan, which may increase the royalty rate by 40 percent. Also, Nokia may renegotiate the deals that have been passed over to Microsoft Corporation (NASDAQ:MSFT), once they expire. Such deals include agreements with Qualcomm, Ericsson, IBM, Motorola Solutions and Motorola Mobility.
As of now, Nokia has 10,000 patent families including 30,000 patents and applications. Of these, only 10 percent are licensed, meaning a potential opportunity to cover the entire compute and CE market. This won’t be difficult for Nokia considering the range of patents it owns including component and hardware design, OS and interfaces.
Apart from these options, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) may also consider the sale of its IPR portfolio, which analysts are valuing around €8.4 billion or at least €2.3 per share. Also, Nokia may fetch a much higher value than the valued amount considering these patents will be of immense importance to a number of players in the segment including Qualcomm, Apple, Samsung, Intel Corporation (NASDAQ:INTC), Broadcom, Ericsson, Huawei and Google Inc (NASDAQ:GOOG).
NSN, HERE a potential opportunity
NSN has a strong presence in most of the key markets like Japan and Korea. In these markets Capex spending at carriers is strong or is expected to pick up. Since NSN enjoy a dominating position, according to analysts “its infrastructure business will also benefit from this trend.”
With the growing popularity of maps and related applications/services in mobile devices, automobile industry and Internet based services, analysts believe that HERE presents a strategic value in the automotive and wireless industry.