A recent deal that will see the Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) smartphone business become part of Micrososft Corporation (NASDAQ:MSFT) had some very specific things to say about the company’s use of its own brand. The terms of the deal gave the “Lumia” and “Asha” brands to Microsoft and licensed the “Nokia” name for feature phones for a decade. After 2015 ends Nokia will be allowed to use its own name on mobile devices once more.
A new report from ABG Sundal Collier, the Norwegian Investment Bank that has been doing stellar coverage on post-mobile Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V), says the Finnish handset maker is “destined to exploit its (still) coveted brand.” The report goes on to look at what the company’s brand might be worth by 2016.
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Nokia returns to mobile
Microsoft Corporation (NASDAQ:MSFT) will sell smartphones under the Lumia and Asha names for as long as it wants, and a legacy deal will see the company continue to sell Nokia feature phones. The Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is still a strong one in mobile, and a business that sits on an asset like that isn’t much of a business.
Nokia will likely not move into the mobile business itself in 2016. It’s seen too much pain and suffering, and the business is an expensive one to get into. There are other options, however, and ABG Sundal Collier takes a look at the likely reward.
There are three major options, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) could enter the mobile market, by building a new business or reselling third part products, it could sell the brand to Microsoft, or it could license the brand to a third party device maker. The third option is probably the most interesting, and it could be the most lucrative for Nokia.
Nokia sells to China
The next two years will see the rise of a huge number of new Chinese companies who are specializing in Android phones for that market. When BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) went up for sale Chinese companies Huawei and Lenovo were at the top of many guess lists for buyers. Neither of them took that opportunity, but the Nokia brand may be a better bet.
The ABG Sundal Collier report estimates that a licensing deal could add €300 million to profits at Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V). A Chinese company looking to hit the lucrative U.S. market, but looking for a cheaper way to introduce its brand, could easily go for the deal.