Nokia's sales tumble as filings suggest $600M licensing deal with Apple

Posted:
in iPhone edited January 2014
Nokia posted its quarterly earnings report on Thursday, revealing Apple has surpassed it to become the No. 1 global seller of smartphones, and also disclosing a $600 million one-time royalty payment that likely includes its new licensing agreement with Apple.



Nokia's filings made public on Thursday reveal that the company received approximately 430 million euros, or more than $600 million U.S. dollars, in intellectual property royalties in the second quarter of 2011. This one-time payment helped the company see an increase in its Devices & Services average selling price and gross margin.



During the quarter, Nokia resolved its patent dispute with Apple, and the resulting licensing agreement included a one-time payment from the iPhone maker. The sum paid by Apple to Nokia was not disclosed, but Thursday's filings would suggest it did not exceed $600 million.



In addition to that one-time payment, Apple has also agreed to ongoing royalty payments to Nokia related to patented wireless inventions owned by the Finnish smartphone maker.



Market watchers have assumed that the terms of the secret settlement were favorable to Apple given the timing of the agreement in June. The out-of-court settlement came after an initial ruling from the U.S. International Trade Commission found that Apple did not infringe on five Nokia patents.



The $600 million in royalties were a bright spot in what was otherwise a dismal quarter for Nokia. The company posted a loss of 368 million euros for the second quarter of 2011, compared with profits of 227 million euros a year ago. Revenues were also down 7 percent to 9.3 billion.



Smartphone shipments sunk to 16.7 million units, down 34 percent year over year, a sum short of the record 20.34 million iPhones Apple sold in the same period. The data officially makes Apple larger than Nokia in terms of unit sales; Apple had already surpassed Nokia in revenue earlier this year.







Nokia has found itself in a freefall as competing devices from Apple and phones running the Google Android mobile operating system have eroded its once-dominant market share. The company has turned to a former Microsoft executive as its new CEO to right the ship.



Nokia will abandon its proprietary Symbian platform in future releases, and will instead embrace Microsoft's Windows Phone platform. The first Nokia handsets running Windows Phone 7 are expected to arrive later this year.
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Comments

  • Reply 1 of 83
    saareksaarek Posts: 1,105member
    A thoroughly deserved fall from grace, Nokia has had over 4 years to respond to the iPhone and they wasted their chance.



    They finally managed to unveil a creditable competitor in June (the N9) but it's too late, no one in their right mind will buy the N9 because it's OS will be discontinued around December when the first Microsoft powered phones launch.



    When you look at the N9 and the OS that it has you just have to stand and shake your head, they obviously had the talent to produce this device and yet still decided to go for the failing Win Mobile platform instead of carving their own niche.



    Innovation is dead, the decline will be gradual but steady on the path to irrelevancy, so so sad.
  • Reply 2 of 83
    macrulezmacrulez Posts: 2,455member
    deleted
  • Reply 3 of 83
    lkrupplkrupp Posts: 6,608member
    If Apple did pay $600 million to Nokia I'd say they got a good deal. Having $76 Billion in the bank helps grease the skids for this kind of stuff.
  • Reply 4 of 83
    replicantreplicant Posts: 121member
    "The company has turned to a former Microsoft executive as its new CEO to right the ship."

    what's that saying again? oh yeah, the blind leading the blind...
  • Reply 5 of 83
    richlrichl Posts: 2,213member
    This is what happens when you tell your customers that your products are shit. There's going to be a lot of angry Finns if Elop can't repair the damage that he's done.
  • Reply 6 of 83
    firefly7475firefly7475 Posts: 1,502member
    Quote:
    Originally Posted by saarek View Post


    When you look at the N9 and the OS that it has you just have to stand and shake your head, they obviously had the talent to produce this device and yet still decided to go for the failing Win Mobile platform instead of carving their own niche.



    If you think that then you have no concept of the direction computing is heading.



    Individual devices are not as important as the overall computing platform they are a part of. How a device works in isolation is not as important as how it interact with other devices.



    Nokia by themselves would have been a very narrow platform and doomed to fail. Joining the Windows ecosystem is a long shot, but at least they are in the race.
  • Reply 7 of 83
    tallest skiltallest skil Posts: 43,399member
    Quote:
    Originally Posted by replicant View Post


    "The company has turned to a former Microsoft executive as its new CEO to right the ship."

    what's that saying again? oh yeah, the blind leading the blind...



    I thought the saying was, "Isn't it funny; a ship that leaks from the top... heh."



  • Reply 8 of 83
    cloudgazercloudgazer Posts: 2,161member
    Actually if you look at the previous quarter's results too the assumption would be a $450mil licensing deal, not $600mil. It's only $600mil if you assume Apple was the only firm paying in that quarter - which seems improbable.
  • Reply 9 of 83
    stelligentstelligent Posts: 2,680member
    Quote:
    Originally Posted by AppleInsider View Post


    Nokia posted its quarterly earnings report on Thursday, revealing it sold a disappointing 16.7 million smartphone units in the last quarter, falling behind Apple's 20.34 million, and also disclosing a $600 million one-time royalty payment that likely includes its new licensing agreement with Apple.

    [/c]



    This explains why Apple's margins were not noticeably affected (in fact, iPhone margins improved). But did this show up in Apple's financial statement as a charge?
  • Reply 10 of 83
    dluxdlux Posts: 666member
    Quote:

    Smartphone shipments sunk to 16.7 million units, down 34 percent year over year, a sum short of the record 20.34 million iPhones Apple sold in the same period. The data officially makes Apple larger than Nokia in terms of unit sales...



    ...of smartphones. Nokia still sells mountains of dumb phones.
  • Reply 11 of 83
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by Firefly7475 View Post


    Nokia by themselves would have been a very narrow platform and doomed to fail. Joining the Windows ecosystem is a long shot, but at least they are in the race.



    Given how narrow WP7 is currently as a platform I don't think that makes a particularly good explanation. Symbian, bad as it is, is outselling WP7 still.



    I think this is more down to the fact that Nokia has proven itself to be a terrible software firm.
  • Reply 12 of 83
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by Dlux View Post


    ...of smartphones. Nokia still sells mountains of dumb phones.



    -25% QoQ of those too - Nokia is deflating like a punctured balloon.
  • Reply 13 of 83
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by stelligent View Post


    This explains why Apple's margins were not noticeably affected (in fact, iPhone margins improved). But did this show up in Apple's financial statement as a charge?



    No - they've been bundling it into the cost of product. They do explicitly say that they gained a chunk of margin from 'settlements', ie. they'd been accruing more than they turned out to need.
  • Reply 14 of 83
    Soon Google will be paying Oracle big bucks.



    Google blinks in Oracle patent case, indicates willingness to pay



    http://fosspatents.blogspot.com/2011...tent-case.html
  • Reply 15 of 83
    saareksaarek Posts: 1,105member
    Quote:
    Originally Posted by Firefly7475 View Post


    If you think that then you have no concept of the direction computing is heading.



    Individual devices are not as important as the overall computing platform they are a part of. How a device works in isolation is not as important as how it interact with other devices.



    Nokia by themselves would have been a very narrow platform and doomed to fail. Joining the Windows ecosystem is a long shot, but at least they are in the race.



    I disagree, sure the N9 is just one phone, but they could have made other handsets across multiple price points.



    The software is there, they made it and so could have created the hardware around it.



    There is a lot of brand loyalty in Europe with Nokia, a range of phones running Meego would have stood a chance. The ineptitude of the senior management is the problem here, they should have been able to release a device like this years ago.



    I still feel that going with Microsoft was the wrong choice.
  • Reply 16 of 83
    Quote:
    Originally Posted by saarek View Post


    There is a lot of brand loyalty in Europe with Nokia and a range of phones running Meego would have stould a chance.



    I still feel that going with Microsoft was the wrong choice.



    Exactly...all the brand loyalty they had got completely diluted now that they are just another MS vendor.
  • Reply 17 of 83
    Quote:
    Originally Posted by RichL View Post


    This is what happens when you tell your customers that your products are shit. There's going to be a lot of angry Finns if Elop can't repair the damage that he's done.



    Elop, being from MS, was directionless... so he pulled out his gold compass, a parting gift from Ballmer... and his compass only pointed in one direction... back to the mothership...
  • Reply 18 of 83
    bullheadbullhead Posts: 493member
    This is nothing. Wait until the first Nokia cloner Microsoft Windows Phones fail just like all the other failed Microsoft Windows Phones.



    Still no one can explain how magically Nokia's Microsoft Phones are going to sell when people are not buying the other cloner Windows Phones now. There is no difference in the phones; they all run the same terrible Microsoft OS.
  • Reply 19 of 83
    saareksaarek Posts: 1,105member
    Quote:
    Originally Posted by bullhead View Post


    This is nothing. Wait until the first Nokia cloner Microsoft Windows Phones fail just like all the other failed Microsoft Windows Phones.



    Still no one can explain how magically Nokia's Microsoft Phones are going to sell when people are not buying the other cloner Windows Phones now. There is no difference in the phones; they all run the same terrible Microsoft OS.



    MS's share in phone OS market share will increase due to this merger, no doubt about it. Unfortunately the move has already started to relegate Nokia to an also ran, the only one who benefits is Microsoft.
  • Reply 20 of 83
    firefly7475firefly7475 Posts: 1,502member
    Quote:
    Originally Posted by cloudgazer View Post


    Given how narrow WP7 is currently as a platform I don't think that makes a particularly good explanation.



    Windows Phone connects to an array of services with a breadth and depth that Nokia couldn't even begin to replicate in their wildest dreams.









    Quote:
    Originally Posted by saarek View Post


    I disagree, sure the N9 is just one phone, but they could have made other handsets across multiple price points.



    A bunch of different handsets does not a computing platform make



    Look at the version of Windows Phone Nokia will be shipping.



    It hooks into the entire Windows Live environment. Email/contacts/calendars with Active Sync, auto photo/video uploads and Office document functionality which in turn utilizes desktop Office, SharePoint, Lync and the hosted version in Office 365.



    And that isn't even going into the Xbox Live functionality, deep Facebook integration and ability to piggy-back off Microsoft's solid development framework.



    There is absolutely no doubt that Nokia were dead without Microsoft. They could still very well be dead even with Microsoft, but like I said at least they are in the race.
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