Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is still in the take off stage, when it comes to new product development, materials technology, codecs and more, but these areas could unlock major value for the company in time ahead, says a report from Credit Suisse dated 20 June 2014 by analysts Kulbinder Garcha, Achal Sultania and Ray Bao. Analysts expect that IPR revenue would grow from €600 million in 2014 to €1.4 billion by 2017 “principally driven by renegotiations at Samsung/Apple driving EPS power of €0.45.”
Analysts have used recent developments at the company, like the launch of Z launcher app, R&D etc to support their case.
Strong R&D supports patent portfolio for Nokia
Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) unveiled Z launcher, a new app, which is a home screen replacement for the Android through which the users will be able to use info, data and apps by scrawling on the screen. The product is in alpha stage and although it is not yet clear if the app will be available for the users, it surely reflects the value of patents Nokia has in the wireless world.
The analysts at Credit Suisse stated that Nokia’s cumulative $60 billion of Research and development over the last 10 years that has earned the company many relevant IPR is the field of cellular standards, design, manufacturing, semis and OS. Analysts believe that major revenue generator will be the cellular patent portfolio, but other areas from where it could generate revenue are fields linked to the mobile phone market.
IntelDigital (IDCC) won a case against Samsung where it has been awarded the royalties for 3G/4G devices (following settlement with Huawei in Dec 2013), but then IDCC, also, lost a litigation case with Nokia, in the recent ITC ruling. Based on this, analysts believe that Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s patent portfolio is strong and that Samsung may resolve the ongoing litigations, which would work in favor of the Finnish company.
According to analysts, the Z launcher app, even though experimental in nature, demonstrates the willingness of the company to utilize its “patents over time.”
Analysts have valued Nokia on SOTP basis assigning it a price target of €2.4/share of value for Nokia Siemens network, €2.1/share for IPR, €0.25/share for HERE, €1.6/share of net cash (post recent €1.4bn dividend distribution) and €0.6/share of DTA. Credit Suisse analysts have an Outperform rating on Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) with a price target of Euro 5.73.