Nokia settles long-time patent suit with Apple
Nokia (NYSE:NOK) announced Tuesday that rival Apple (NASDAQ:AAPL) has finally agreed to settle all patent disputes between the two mobile phone companies.
The news sent Nokia's shares up by more than 2.7% today, as the settlement means Nokia can now focus its resources on its core business, at a time when it is struggling to compete in the smart phone market.
The deal consists of a one-time payment by Apple and ongoing royalties to be paid by the iPad maker to Nokia for the entire term of the agreement, expected to have a positive effect on Nokia's second quarter earnings.
Specific terms are confidential and were not disclosed, the Finnish company said.
However, according to reports, analysts predict that Nokia could receive between 1% and 2% of iPhone revenue, which is estimated to be around $43 billion this year.
Nokia sued Apple in the US in October 2009, arguing that the California-based tech company was not paying dues on technologies patented by Nokia, with the two companies being embroiled in legal disputes surrounding patents ever since.
The settlement today withdraws both Nokia's and Apple's respective complaints to the US International Trade Commission, Nokia said in a statement.
"We are very pleased to have Apple join the growing number of Nokia licensees," said president and CEO Stephen Elop.
"This settlement demonstrates Nokia's industry leading patent portfolio and enables us to focus on further licensing opportunities in the mobile communications market."
During the last two decades, Nokia has invested approximately EUR 43 billion in research and development, building a portfolio with over 10,000 patent families.
At the end of May, the company slashed its second quarter outlook, prompting a 14% decline in its share price on the day of its announcement.
The Helsinki, Finland-based company said that intensified competition, market trends and a shift toward cheaper devices were factors impacting its slashed outlook.
Original net sales guidance for Nokia's devices and services business was in the range of EUR6.1 billion to EUR 6.6 billion, but due to lower volumes and selling prices, the company said it expected net sales to be "substantially below" these levels.
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