Nokia Wins Apple in Legal Battle
Nokia’s shares rose as much as four percent before closing up one and a half percent. Analysts welcomed the news & said it would help Nokia concentrate on its core business at a time when it faces immense challenges. This is the first positive news from Nokia for a long time. They can both focus on their businesses now, & the dispute was settled to Nokia’s advantage, said Mikael Rautanen, analyst at Inderes in Helsinki.
Handset maker Nokia is likely to be paid hundreds of millions of dollars by Apple after victory in a legal wrangle over know-how used in its arch-rival’s top-selling iPhone. Nokia, struggling to stem the slide in its cell phone market share & forecast to post losses this quarter & the next, said on Tuesday the deal would boost second-quarter earnings. Analysts said it was clear the sums involved would be significant, with some specialists estimating Apple’s one-off payment at $650 million. With the deal, Nokia avoids protracted litigation & disruption at a time when the management needs to focus 100 percent on its core business given the current difficulties, said Ben Wood, head of research at CCS Insight.
Earlier this week Nomura forecast Nokia would lose its position as the world’s largest smartphone maker this quarter to Samsung Electronics & that Apple would surpass it next quarter. Nokia warned on second quarter sales & profits at the finish of May, abandoning hope of meeting key targets weeks after setting them & raising questions over whether new CEO Stephen Elop can deliver on the turnaround they promised.
Most analysts said Nokia could get around one percent of iPhone revenue, seen at around $43 billion this year according to a Reuters poll, with highest estimates reaching one percent. The settlement has been reached surprisingly speedy, indicating Nokia had a powerful case, said Neil Mawston from Strategy Analytics. Strategy Analytics said Apple had so far sold iPhones worth $65 billion, indicating a one-off payment of $650 million if the rate is one percent.
Nokia, one time the ubiquitous name in handsets, faces a daunting task to meet up with Apple in the high finish of the smartphone market, where it’s fallen behind both the iPhone & Google Inc’s Android devices. An Apple spokesman confirmed the deal. Apple shares were up 1.38 percent at 16.25 GMT.
Apple & Nokia have been locked in a legal tussle since October 2009, when Nokia sued Apple in the United States, arguing the iPhone maker was getting a free ride on technologies patented by Nokia. Nokia said details of the deal which settles all litigation between the & means both sides will withdraw complaints to the U.S. International Trade Commission were confidential.
It is clear that Apple will be the payer here, & the sums will be significant, said Swedbank analyst Jari Honko. To build up its mobile patent warchest Google has offered to pay $900 million for over 6,000 patents & patent applications belonging to Nortel Networks, a one time mighty Canadian network equipment maker.
Legal battles have become increasingly common in the cell phone industry since Apple & Google carved out a large chunk of the profitable & quickly expanding smartphone market at the expense of older players. This settlement permits us to focus on further licensing opportunities in the mobile communications market, CEO Elop said in a statement. Nokia, which has said it will be more aggressive in licensing its patents, flagged further legal battles were ahead.
Emerging victorious from such a war, Nokia is in a powerful position to collect royalties from other industry players, from makers of Android-based devices, Mueller said. Analysts warned Nokia still had a long way to go toward any recovery. Analysts said makers of Google Android rings were the next likely target.