Seeking Alpha

JPMorgan, Berenberg see Nokia improving IP monetization

  • JPMorgan's Sandeep Deshpande, who started coverage on Nokia (NOK +1.9%) today with an Overweight and €8 PT today, thinks the company would be worth €15/share if it could raise its mobile device royalty rate to 1%. Berenberg's Adnaan Ahmad predicts Nokia's rate "should gradually inflate to  0.75% over time as it renegotiates existing deals and aggressively monetises its IPR pool."
  • Qualcomm, which has profited far more than any company from mobile IP licensing, often receives royalty rates in the 4%-5% range, though certain firms have negotiated lower fees via cross-licensing deals.
  • The sale of Nokia's phone unit to Microsoft frees the company to become more aggressive in its efforts to license its ~30K patents, since it now only needs cross-licensing deals for infrastructure gear. Thanks to the sale, Deshpande thinks there could be opportunities to unravel cross-licensing deals with firms whose IP Nokia no longer needs (such as Apple).
  • He adds a recent U.K. injunction scored by Nokia in its patent battle against HTC could have big implications, since it suggests an OEM's use of baseband chips supplied by Qualcomm (a Nokia licensee) doesn't mean it's protected from having to separately pay Nokia.
Comments (39)
  • La Rue
    , contributor
    Comments (674) | Send Message
     
    Sandeep is my new best friend : )
    6 Dec 2013, 05:11 PM Reply Like
  • Ooi
    , contributor
    Comments (200) | Send Message
     
    Happy days.
    6 Dec 2013, 05:17 PM Reply Like
  • Timothy Bryan
    , contributor
    Comments (707) | Send Message
     
    This will take a few years, but it seems obvious something like this expansion of licensing/IPR revenues will occur...
    6 Dec 2013, 05:22 PM Reply Like
  • mKiwi
    , contributor
    Comments (568) | Send Message
     
    Thank you Sandeep Deshpande, and Merry Chritmas :) Ho, Ho, Ho

     

    I'm a very happy Nokia camper.
    6 Dec 2013, 05:35 PM Reply Like
  • Richard Waldren
    , contributor
    Comments (221) | Send Message
     
    It will not take a few years. I believe it will be a whole lot sooner than people think. Especially since there are companies that go after patent infringements.
    6 Dec 2013, 05:41 PM Reply Like
  • Dantes_Will
    , contributor
    Comments (324) | Send Message
     
    They will go after the violations immediately... Nok already has most of their cases built.

     

    Likely 2/3 of the companies will put up a show and complain, but settle and sign, which means an addition to the bottom line in 2014.

     

    The 1/3 that try to take it to court, however, could drag it out a few years.
    6 Dec 2013, 08:58 PM Reply Like
  • Timothy Bryan
    , contributor
    Comments (707) | Send Message
     
    I hope you are right Dantes....
    6 Dec 2013, 09:09 PM Reply Like
  • mr wonder
    , contributor
    Comments (541) | Send Message
     
    Hm... I don't know whether I should be happy or cautious when business banks like JPMorgan or GoldmaSachs screaming to buy NOK.
    6 Dec 2013, 05:43 PM Reply Like
  • ttc537dp
    , contributor
    Comments (50) | Send Message
     
    What is your point please?
    6 Dec 2013, 08:26 PM Reply Like
  • dwdallam
    , contributor
    Comments (6601) | Send Message
     
    HIs point is that JP Morgan and Goldman are liars and cheats. They've lost in court for many reasons, including insider buying etc.
    7 Dec 2013, 02:11 AM Reply Like
  • sidiji
    , contributor
    Comments (145) | Send Message
     
    We might not see these current prices for much longer, remember that Nokia is still coming out of BK valuations when idiots like Bernstein put a 1B value on the entire IP portfolio to bash the stock down to the 2's. Likewise, Devices was given negative valuation...which unfortunately for them, turned out to be worth and sold for 7B. Nokia still has junk credit rating until post-deal, when all of a sudden its flush with cash and turns triple AAA, there's a huge arbitrage opportunity, a lot of the institutionals still cant invest in nokia as yet because of their charter limitations. A lot of the IP licensing re-negotiations will take place post deal as well. This is one of those left hook stocks most people don't understand til it's fully valued and turns into a QUALCOMM.
    6 Dec 2013, 09:16 PM Reply Like
  • Timothy Bryan
    , contributor
    Comments (707) | Send Message
     
    Well said Sidiji....
    6 Dec 2013, 10:43 PM Reply Like
  • dwdallam
    , contributor
    Comments (6601) | Send Message
     
    Agreed. It's going to be ranged around 8 dollars until the deal is completely finalized and they show a clear profit. If that doesn't bring prices up, then the only thing left is for Nokia to grab revenue from other companies in the networking market, wait and see if IP can generate, and ramp up HERE, which probably isn't going to be a fast rate of change.

     

    If everything goes Nokia's way, we'll see SP advance early 2014. If not, then we'll have to wait for them to bring home the bacon and show it on their 2 QQ 2014. That should do it then. If that doesn't do it, it's just dead money and I'm out. At that point, Nokia is cursed.
    7 Dec 2013, 02:16 AM Reply Like
  • Timothy Bryan
    , contributor
    Comments (707) | Send Message
     
    dwd,
    don't worry, we'll see a nice pop next month.
    7 Dec 2013, 02:32 AM Reply Like
  • hneumann
    , contributor
    Comments (560) | Send Message
     
    And there is this, from minyanville.com articles today:

     

    Fidelman also argued that Microsoft's new efforts to integrate its mobile OS, desktop OS, and Xbox gaming system will be a real draw for mobile consumers. “As Microsoft rolls out its integration capabilities to business people across the enterprise Fidelman also argued that Microsoft's new efforts to integrate its mobile OS, desktop OS, and Xbox gaming system will be a real draw for mobile consumers. “As Microsoft rolls out its integration capabilities to business people across the enterprise through Office 365 and Windows 8.1, and to consumers through the Xbox, Microsoft will pick up a lot of new users that are looking for seamless app integration across their business and home lives," he wrote. And, let's not forget Microsoft's acquisition of Nokia (NYSE:NOK) this year, which Fidelman argues will help the company target emerging markets as well, because a "low-cost, integrated smartphone will be too good an option to pass up for users in emerging countries."

     

    Read more: http://bit.ly/1iIC4x4 Of US smartphone market, but globally, Microsoft is a threat.
    6 Dec 2013, 10:01 PM Reply Like
  • La Rue
    , contributor
    Comments (674) | Send Message
     
    Friday upgrade from JP, then Saturday India tax news. Market reaction on Monday will be .......?
    7 Dec 2013, 10:44 AM Reply Like
  • jamesingram32
    , contributor
    Comments (542) | Send Message
     
    a large move upwards:)
    9 Dec 2013, 05:57 AM Reply Like
  • La Rue
    , contributor
    Comments (674) | Send Message
     
    Yeah baby !
    9 Dec 2013, 06:39 AM Reply Like
  • Doug R
    , contributor
    Comments (27) | Send Message
     
    Perfectly said Sidiji.
    Hneumann is right. I was at the Microsoft Xbox executive advertising launch event the other day, and I was able to control everything on the tv with my 920, surf the web, play games, etc. now they really have a 360 experience, and kids are going to start asking for MSFT/Nokia handsets to go with their Xbox.
    LaRue the tax battle will be resolved, does India really want to put 30K people out of a job? Doubtful.

     

    Dwdallam, JPMorgan and Goldman Sachs were the first to buy NOK last summer when it was $2, and although they've sold most, I think they are still incentivized to see it go up further, but your concerns are valid. And it always pops in Jan, so if it can set a new ceiling at $10 before the deal closes, then we're on our way to 12 by the end of Q1, another 50% move upward that is not dead money, just smart buy and hold. Yeah I'm talking to you Andreas who seems to forget Capital gains taxes for us small time investors.

     

    Oh and I'll give you all a new pick--MKTG, a double by May.
    7 Dec 2013, 04:36 PM Reply Like
  • toraji
    , contributor
    Comments (745) | Send Message
     
    Ok girls and boys...

     

    A lot is going on right now and we are almost at the point of closing the deal but the Indian tax pat seems to throw a bone in the dog house as we all now. I am wondering what the result will be if they really do not free the assets from Nokia and MS is not able to buy that part of the Nokia wing. Clearly it is a huge part of the deal (having a factory in India)

     

    I have been browsing a big part of the today and the only interesting remarks I found are here:

     

    http://yhoo.it/1ctgebt

     

    Nothing is set in stone yet and I really wonder if the Indian government is trying to get way more out of NOK and MS then they initially intended. I agree they gamble with blank dices but still, If they "confuse" the deal we all might be in a lot of trouble and to me it seems only MS will run out as a winner because they don't have to pay for that part of NOK's business while all other parts are in place. Asha might be doomed by the actions of the Indian government... Maybe this is what Nokia and MS want?

     

    I don't know, I am confused by this straw/tree chunk that is getting in the way of a smooth transaction and I am afraid this will set us back for a long period of time

     

    Any comment/suggestion/advise is very welcome
    7 Dec 2013, 09:51 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1870) | Send Message
     
    Good thoughts on that Yahoo thread.

     

    Some additional points in SA $NOK Stocktalks here:
    http://seekingalpha.co...

     

    My thinking is that the $300M? offer Nokia made last week is the value Nokia sees w/ its Chennai assets, and was willing to offer as sing of good will. If and when Indians seem to refuse that, Nokia is willing to walk away, shut down operations, and leave the factory to Indians. Good luck for them monetizing that.

     

    In the short term the D&S deal would happen w/o Chennai, and Nokia would hold on to that and wind it down in short order.

     

    Regarding capacity, I do not think MSFT needs or even necessarily wants Chennai. It is now clear that the new VIetnam facility is way too big, and producing wrong kind of phones (i.e. feature phones). So MSFT probably will just ramp up production there and forget about Chennai.

     

    So the risk to Nokia seems to be the value of Nokia India assets, which presumably at at around $150M per the Yahoo thread. And then of course some lost goodwill in India.

     

    Now, the real risk / question is how well is Nokia Group isolated from Nokia India. If there is some way that the Indians can go after Nokia itself, then this can turn into bigger problem. I have no idea about the details of the corporate structure or if and how Indians could make claims and go after Nokia Group.

     

    The Indian tax authorities clearly do not care about legalities and just make up stuff as they go along. The real question is what is the quality of the Indian court system. If the courts are corrupt, even most ridiculous sentences can be imposed.

     

    Additionally, just to keep in mind, if the Indians ever manage to get any tax monies from the mothership, those would very likely be reimbursed / counted towards Nokia's tax liabilities in Finland. In practice meaning many more years of no corporate tax payments for Nokia.

     

    Bottomline, my thinking is that this is not going to derail the D&S
    deal.
    7 Dec 2013, 10:28 PM Reply Like
  • Timothy Bryan
    , contributor
    Comments (707) | Send Message
     
    Agreed Seppo, I am not expert on the corporate structure, but it is clear Nokia will wind things down before giving into these asinine figures that the braindead Indian officials keep trotting out. I have never in my life seen a more stupid set of actions taken by officials; they are specifically telling the corporate world they will extort money and backdate claims, and they could CARE LESS if the world knows it.

     

    It is like a twisted form of financial masochism that ensures your country will attract very little capital, and they simply do not care. I have never seen anything like it, unless you count the actions of Venezuela or Argentina as similarities.
    8 Dec 2013, 06:45 AM Reply Like
  • toraji
    , contributor
    Comments (745) | Send Message
     
    Sep,

     

    As always, thanks for your input and I am happy to hear you do not think this will impact NOK as many people will think it does but that is exactly where I am afraid of, people will not see the deep and will walk away from something good.

     

    I also think MS will not be worried about the Chennai factory but it will deduct money fro the deal they made right?

     

    I just hope NOk and the Indian I-t will find a way to sort things out. MS was intending to prolong the Asha line and as far as I Understood those phone are produced in Chennai right? I truly believe the "dumb" phones are very important to the future of WP8 so I hope MS and NOK will find a way to make that happen

     

    Regards and thanks for always being on top of things
    t
    8 Dec 2013, 12:01 PM Reply Like
  • dwdallam
    , contributor
    Comments (6601) | Send Message
     
    "If and when Indians seem to refuse that, Nokia is willing to walk away, shut down operations, and leave the factory to Indians. Good luck for them monetizing that."

     

    If this is really it, the Indian authorities on this deal are lacking intelligence. This is especially true if there is a downturn coming to world markets, where emerging economies, like India, will be hardest hit, not to mention their population to GDP ratio, which is simply unsustainable for any type of long term growth. Both China and India are but low wage worker birthing stations.

     

    I mean no disrespect to India or China, but when you have a population that continues to increase in the face of declining world resources, the conclusion is extremely horrific.
    10 Dec 2013, 05:03 PM Reply Like
  • Richard Waldren
    , contributor
    Comments (221) | Send Message
     
    I wish I understood more about this stuff. Is there ever a possibility MSFT would buy the whole NOK? MSFT and three other companies formed a company for patent infringement and SPEX is after the people.
    8 Dec 2013, 01:05 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1870) | Send Message
     
    The whole company w/o D&S is now worth ~$30B plus premium. That's a lot of dough even for $MSFT. And $MSFT does not want to have anything to do w/ NSN. The most likely (and _very_ unlikely ATM) scenario is that if at some point when new Nokia is in dire straits again, they might sell HERE and all IP to MSFT.
    8 Dec 2013, 02:44 PM Reply Like
  • dwdallam
    , contributor
    Comments (6601) | Send Message
     
    That's Nokia's Market Cap, though, right? After subtracting debt, and assuming an 8B cash pile after the deal, their EV is much lower?

     

    I believe Nokia's long term debt is around 8B currently, whereas Qualcom's is 17M !! (wow, only 17M.)
    10 Dec 2013, 05:06 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1870) | Send Message
     
    @DW Correct. MSFT would of course get some money back by selling undesired assets (e.g. NSN), recognizing cash etc
    10 Dec 2013, 05:18 PM Reply Like
  • mKiwi
    , contributor
    Comments (568) | Send Message
     
    DreamWorks Turns Nokia Maps Into Mobile Game

     

    http://bit.ly/J2uSfq

     

    I was very excited to see this news as I believe there is good revenue potential for Nokia HERE in gaming. I never thought to see this so soon.

     

    I believed Nokia HERE would be really great integrated into a series of real world games based on real world mapping. Using the mapping database to produce racing games, battle sims, adventure games, etc.

     

    I believed that HERE could partner with any of the gaming studios such as Sony PlayStation, MSFT Xbox, Znga, King, etc.

     

    Nokia and DreamWorks Animation: Telling magical new stories together

     

    http://nokia.ly/J3XSmY

     

    Here is a Youtube video:

     

    http://bit.ly/J3XTqZ

     

    HERE navigation in automobiles
    HERE navigation in smartphones
    HERE navigation utilised by Yahoo & Bing
    HERE navigation in gaming

     

    Ca Ching!

     

    And the game is available on the 2520 tablet :)
    8 Dec 2013, 03:02 PM Reply Like
  • mKiwi
    , contributor
    Comments (568) | Send Message
     
    Here is a really good article about the new gaming initiative.

     

    Dragons Adventure – the future of gaming?

     

    http://nokia.ly/1bpvxxl

     

    "Jim Mainard, from DreamWorks Animation, has a vision of the future. Right now, it involves dragons, maps, kids and their parents. Tomorrow it’s going to turn your backyard into Shrek’s swamp. Jim wants the world around us to be more interactive and entertaining. Here’s how…"

     

    There are many very successful Finnish gaming companies. Nokia has the opportunity to get in on the action in this lucrative arena.

     

    I believe Nokia should pursue this avenue of advance. With arguabley one of the best mapping databases on the planet, Nokia could have a very big presence in gaming.
    8 Dec 2013, 03:25 PM Reply Like
  • mKiwi
    , contributor
    Comments (568) | Send Message
     
    Another interesting article about the JP Morgan Chase upgrade of Nokia stock to Overweight.

     

    Nokia Coverage Initiated at JPMorgan Chase & Co. (NOK)

     

    http://bit.ly/IOwkkS

     

    While the JP Morgan Chase price target is now US $10.80 the average price target for the stock, according to this article is US $12.40.

     

    "Analysts at Zacks reiterated a “neutral” rating on shares of Nokia in a research note to investors on Friday, November 1st. They now have a $8.00 price target on the stock. Separately, analysts at Scotiabank raised their price target on shares of Nokia from $6.10 to $8.35 in a research note to investors on Wednesday, October 30th. Finally, analysts at BMO Capital Markets raised their price target on shares of Nokia from $5.00 to $7.00 in a research note to investors on Wednesday, October 30th. They now have a “market perform” rating on the stock. Six investment analysts have rated the stock with a sell rating, twenty have assigned a hold rating and thirteen have issued a buy rating to the company’s stock. The company presently has a consensus rating of “Hold” and an average target price of $12.40."
    8 Dec 2013, 09:49 PM Reply Like
  • dwdallam
    , contributor
    Comments (6601) | Send Message
     
    mK

     

    "I believed Nokia HERE would be really great integrated into a series of real world games based on real world mapping. Using the mapping database to produce racing games, battle sims, adventure games, etc."

     

    I never thought of this. Good thinking.
    10 Dec 2013, 05:07 PM Reply Like
  • dwdallam
    , contributor
    Comments (6601) | Send Message
     
    " They now have a $8.00 price target on the stock. "

     

    I hope all of the targets below 8 got out. No more profit I guess. Good for them. I love the price targets below 7.00USD. Those make me laugh.
    10 Dec 2013, 05:15 PM Reply Like
  • mKiwi
    , contributor
    Comments (568) | Send Message
     
    DW

     

    People talked about Nokia achieving a 1% royalty rate per smartphone handset sold and they say this will be accretive to Nokia's bottom line.

     

    Imagine if Nokia's mapping database is utilised by some of the main stream gaming franchises and Nokia charge US $XXX per game.

     

    I don't believe the dragons game is revenue bearing but hopefully they can start earning revenue licensing their mapping database to gaming franchises.

     

    If that dragons game is popular it may start a new trend in gaming and that will provide another revenue stream for HERE mapping and Nokia.
    10 Dec 2013, 05:27 PM Reply Like
  • toraji
    , contributor
    Comments (745) | Send Message
     
    Nokia Offers 360M for unfreeze assets

     

    http://yhoo.it/IAV0O6

     

    EU warns Nokia not to be a patent troll

     

    http://bit.ly/IAUYpg

     

    Still +.20 pre market :-)
    9 Dec 2013, 09:16 AM Reply Like
  • dwdallam
    , contributor
    Comments (6601) | Send Message
     
    And down .08 today. It is slowly moving up on support. Long way to go to reach resistance.
    10 Dec 2013, 05:16 PM Reply Like
  • toraji
    , contributor
    Comments (745) | Send Message
     
    Still +.of the day before, I expected a downer way bigger with all the stuff going on right now... I think we do pretty good :-)
    10 Dec 2013, 05:59 PM Reply Like
  • toraji
    , contributor
    Comments (745) | Send Message
     
    Aftermarket +0.13 :-). what's going on? :-)))
    10 Dec 2013, 07:33 PM Reply Like
  • toraji
    , contributor
    Comments (745) | Send Message
     
    Nokia putting out Samsung fire :-)

     

    http://bit.ly/18l1L29

     

    Love it :-)))
    10 Dec 2013, 07:40 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|