Daily Management Review

Analysts say Just Days Left for Verdict on Settlement in Nokia-Samsung Patent Case


Analysts say Just Days Left for Verdict on Settlement in Nokia-Samsung Patent Case
With analysts forecasting a one-time payment of hundreds of millions of euros for the Finnish company, Nokia and Samsung are expected to settle their two-year patent dispute within days.
In order to settle additional compensations for a five-year period starting from early 2014, Nokia had entered into a binding arbitration with South Korea's Samsung in 2013.
It is expected that the International Chamber of Commerce's arbitration court would soon make its ruling on the issue.
The verdict could boost Nokia's operating profit by about 700 million euros ($758 mln) this year, forecasting the court will stipulate an annual patent fee of 300 million euros, said analyst Sami Sarkamies of Nordea, one of few analysts to give a precise estimate.
"Samsung has been paying Nokia probably 100 million per year, and the rate could now come up to around 300 million euros (per year). The settled rate will also be paid retrospectively for the last two years," Sarkamies said.

"But they have already booked perhaps 100 million a year from Samsung to their income statement, so the EBIT impact for this year could be around 700 million euros," Sarkamies added.
Nokia shares have fallen 9 percent since last April when it announced a 15.6 billion euro takeover of French network gear rival Alcatel-Lucent which is expected to be completed this quarter and Sarkamies has a "hold" rating on Nokia shares.
The special terms negotiated by the French government and the integration process have been causes of worry for investors. However in case the settlement amount that is decided with Samsung is much bigger than what the analysts forecast, there can be a boost to the share price.  
The shares of Sweden's Ericsson saw a sharp increase last month after the company said that a patent license deal with Apple Inc would help lift its intellectual property rights revenue by up to 40 percent in 2015.
While still holding on to a portfolio of phone patents, the one time leader and dominator of the global mobile phone market, Nokia is now primarily focused on telecom network equipment.
The International Chamber of Commerce had advised that the settlement with Samsung is expected by the end of January, the company had said last month.
There were no comments about the possible verdict in the settlement case with Samsung from Nokia spokesman who just said that the company had nothing to add beyond the previous statement.