NOK Nokia Corp

By Dominic Chopping 

Shares in Nokia Corp. slumped Monday after the Finnish telecommunications equipment maker issued guidance for its intellectual-property portfolio following a patent deal reached with Samsung Electronics Co., that left some investors disappointed.

Nokia said that, including the Samsung award, it expects to receive at least EUR1.3 billion ($1.4 billion) in cash between 2016 and 2018 related to settled and continuing arbitration regarding its intellectual property.

Some investors had pinned their hopes on Nokia's large stable of patents generating higher revenue and contributing substantially more to earnings, with many recent buyers of the stock taking a position solely related to the intellectual property portfolio, said a telecommunications analyst, who declined to be named.

In midmorning trading in Helsinki, Nokia's shares had dropped 10% to be at EUR5.92 apiece.

Investor disappointment over the Nokia-Samsung settlement highlights the challenge that telecommunication manufacturers face in getting paid for their intellectual property at a time of stiff competition and consolidation in the cellphone market. In addition, the need to share technology standards has led to friction and legal proceedings between network manufacturers and smartphone makers over the fair use of some technologies.

The deal follows the resolution of a patent dispute between Ericsson AB and Apple Inc., which reached an out-of-court settlement in December. Apple agreed to pay an undisclosed amount plus continuing royalties over seven years to use some of the Swedish company's patents.

Samsung and Microsoft agreed to end a contract dispute a year ago.

Nokia said earlier Monday that an arbitration panel has ruled on how much the South Korean company has to pay as part of their 2013 licensing agreement, but didn't disclose the sum itself.

"The use of independent arbitration to resolve differences in patent cases is a recognized best practice, and we welcome the additional compensation payable to Nokia under the extended agreement," said Nokia Technologies President Ramzi Haidamus.

The Finnish and South Korean companies agreed in November 2013 to a new licensing agreement, extending a previous deal through 2018 that allows them to use each other's patents, thereby lessening the likelihood of lawsuits and related costs.

Nokia was set to receive more compensation from the South Korean company than it received from a previous patent deal, but the Espoo-based Finnish company agreed with Samsung that the exact sum would be decided by arbitration.

Nokia has put its investment in research and development between 1984 and 2014 at more than EUR50 billion, with Nokia Technologies managing a portfolio of 30,000 individual patents and patent applications.

Nokia Technologies expects to report net revenue of around EUR400 million in the fourth quarter of last year and EUR1.02 billion for the full year, Nokia said Monday.

Nokia agreed to sell its mobile handset business to Microsoft Corp. in 2013.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

February 01, 2016 07:32 ET (12:32 GMT)

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