Nokia wins rare battle as Apple settles legal row

Friday, 23 December 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Handset maker Nokia is likely to be paid hundreds of millions of dollars by Apple after victory in a legal wrangle over technology used in its arch-rival’s top-selling iPhone.

Nokia, struggling to stem the slide in its cellphone market share and forecast to post losses this quarter and 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 experts estimating Apple’s one-off payment at $ 650 million.

Nokia’s shares rose as much as 3 percent before closing up 1.58%. Analysts welcomed the news and said it would help Nokia concentrate on its core business at a time when it faces huge challenges.

“This is the first positive news from Nokia for a long time. They can both focus on their businesses now, and the dispute was settled to Nokia’s advantage,” said Mikael Rautanen, analyst at Inderes in Helsinki.

“With the deal, Nokia avoids protracted litigation and disruption at a time when the management needs to focus 100% 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 and that Apple would surpass it next quarter.

Nokia warned on second quarter sales and profits at the end of May, abandoning hope of meeting key targets just weeks after setting them and raising questions over whether new CEO Stephen Elop can deliver on the turnaround he promised.

Most analysts said Nokia could get around 1% of iPhone revenue, seen at around $ 43 billion this year according to a Reuters poll, with highest estimates reaching 2%.

Strategy Analytics said Apple had so far sold iPhones worth $ 65 billion, indicating a one-off payment of $ 650 million if the rate is 1 percent.

“The settlement has been reached surprisingly fast, indicating Nokia had a robust case,” said Neil Mawston from Strategy Analytics.

Nokia, once the ubiquitous name in handsets, faces a daunting task to catch up with Apple in the high end of the smartphone market, where it has fallen behind both the iPhone and Google Inc’s Android devices.

Apple and 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.