Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is still indebted to Microsoft Corporation (NASDAQ:MSFT) for 500 million euros ($650 million) as part of its agreement to use the Windows Phone operating system.
In its 20-F financial report the last fiscal year, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) reiterated its projections for the next year ahead on device sales and margins for both devices and services, as well as for its Nokia Siemens Networks division.
ValueWalk's Raul Panganiban interviews Kirk Du Plessis, Founder and CEO of Option Alpha, and discuss Option Alpha and his general approach to investing. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with Option Alpha's Kirk Du Plessis
The report noted that the Finish mobile company still has to pay Microsoft Corporation (NASDAQ:MSFT) the excess of platform support payments from Microsoft to Nokia over the life of their agreement. The length of the agreement was, however, undisclosed in the company’s annual report.
“Our agreement with Microsoft includes platform support payments from Microsoft Corporation (NASDAQ:MSFT) to us as well as software royalty payments from us to Microsoft. Under the terms of the agreement governing the platform support payments, the amount of each quarterly platform support payment is USD 250 million.” said Nokia its 20-F report.
According to Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V), “Over the life of the agreement the total amount of the platform support payments is expected to slightly exceed the total amount of the minimum software royalty commitment payments.”
This payment may hit Nokia’s already dwindling financial condition. Nokia, however, anticipates being a net recipient of funds this year, even after the licensing fees.
“We have recognized a portion of the received platform support payments as a benefit to our Smart Devices cost of goods sold and the remainder as a liability as part of accrued expenses and other liabilities on our balance sheet.” said Nokia is the report
While Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) has still now shown any interest in the tablet market, the company expect that the success of Windows 8 may fundamentally contribute in the success of the Finish company.
“The success of Nokia’s Windows Phone 8 smartphones will be negatively affected if the Windows 8 platform does not achieve or retain broad or timely market acceptance, or is not preferred by ecosystem participants, mobile operators, and consumers,” the report says.