Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) announced the extension of its patent license agreement with Samsung Electronics Co. Ltd. (KSE:005930) (LON:BC94) for five years.
The patent license agreement between the two companies is supposed to expire by the end of this year. The amount of additional compensation that will be paid by Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) for the patent license is not yet determined. Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) expects to settle the compensation during a binding arbitration in 2015.
In a statement, Nokia’s chief intellectual property officer said, “This extension and agreement to arbitrate represent a hallmark of constructive resolution of licensing disputes, and are expected to save significant transaction costs for both parties.”
Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) sold its Devices & Services business to Microsoft Corporation (NASDAQ:MSFT), but it still owns its industry-leading patent portfolio. According to the Finnish company, it has the opportunity to create value by actively managing its portfolio and investing in innovation.
Alcatel-Lucent is a profitable acquisition for Nokia
Bernstein Research analysts Pierre Ferragu and his colleague previously stated that Nokia still has plenty of assets including its location business services, equipment, patent portfolio, and significant amounts of cash. They emphasized that the company has several strategic options for these assets such as using its cash for large acquisitions. According to them, the wireless division of Alcatel-Lucent SA (NYSE:ALU) is a profitable acquisition for Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V).
Commenting on the extension of the patent license agreement, Sami Sarkamies, analysts at Nordea Bank AB said, “This deal demonstrates the opportunities for the new Nokia in intellectual property rights. It’s significant because it relates to Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930), the client with the biggest potential in such rights. It’s good timing for Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) and shows they will be able to benefit from the device-unit divestment from the first day.”
Nokia’s spokesperson Mark Durrant said the company generates an annual revenue of approximately €500 million or $675 million from its agreements on more than 50 patent licensees. He declined to provide further details regarding the company’s agreement with Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930).
The stock price of Nokia is up
The stock price of Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is up 1.72% to $7.75 per share on the New York Stock Exchange as of this writing.