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Mon, Feb. 1, 12:07 PM
- BofA/Merrill's Kai Korschelt and Canaccord's Mike Walkley have each downgraded Nokia (NOK -12.4%) to neutral ratings after the company disclosed a Samsung patent arbitration ruling (good through the end of 2018) that involves smaller-than-expected royalty payments (press release). Both Nokia and merger partner Alcatel-Lucent (ALU -11.9%) continue seeing double-digit declines.
- Korschelt: 'As a result of the increase in recurring payments Nokia is guiding to a [Nokia Technologies] recurring revenue runrate of E800m (800 million euro), below consensus of E900m (900 million euro) for 2016 and below the [BofA] estimate of E986m ... Growth in the high-margin Technologies division was meant to be a major driver of earnings/EBIT and in our view has helped the stock trade at a material premium to Ericsson. We now believe that the risk is that this premium narrows as investors may feel less confident in Nokia achieving EPS of ~E0.6 by 2018."
- He qualifies his remarks by adding Samsung "likely received volume discounts" from Nokia, and that higher rates might be received from other OEMs. "LG is already in arbitration and we believe the licensing agreement with Apple will expire this summer. Further the arbitration only covers standard-essential patents and we continue to believe that Nokia should be able to incrementally monetize its implementation patents as well. Having said all of that, the arbitration decision was meant to be a major catalyst for the stock..."
- Walkley: "Following the award with Samsung, Nokia’s annualized Technologies division revenue run rate is approximately €800M or well below our €1.2B expectation ...While we remain positive the now-closed Alcatel-Lucent acquisition can deliver its €900M cost synergy target by 2019, these assumptions are included in our updated model. However, due to our materially reduced licensing forecasts, we are lowering our estimates, resulting in our price target decreasing to $6.50."
- Nokia still "expects to receive at least approximately EUR 1.3 billion of cash during years 2016-2018 related to its settled and ongoing arbitrations [for] Nokia Technologies, including [the Samsung] award." Both Nokia and Alcatel's Q4 reports arrive on Feb. 11.
Mon, Feb. 1, 9:19 AM
Mon, Feb. 1, 4:59 AM
- After much hype and anticipation, Nokia (NYSE:NOK) has settled a lengthy patent dispute with Samsung (OTC:SSNLF), but investors were disappointed by the financial terms of the deal.
- The agreement will lift sales of the company's patent division to around €1.02B ($1.1B) in 2015, including catch-up payments, from €578M in 2014.
- The annualized run-rate for the unit, which will become a smaller part of Nokia after its proposed €15.6B takeover of Alcatel-Lucent (NYSE:ALU), is now about €800M.
- NOK -12.5%; ALU -12.7% premarket
- Previously: Nokia-Samsung patent verdict expected within days (Jan. 31 2016)
Mon, Jan. 4, 3:51 AM
- Nokia (NYSE:NOK) has officially gained control of French rival Alcatel-Lucent (NYSE:ALU) through a €15.6B all-share deal after the French stock market authority declared the offer successful.
- "The two companies will begin to progress their integration plans, with the first day as an operationally combined group on January 14, 2016," Nokia said in a statement.
- According to interim results, the Finnish firm will hold around 79% of Alcatel shares.
Dec. 18, 2015, 2:13 PM
- Bloomberg reports Acacia (ACTG -11.6%) has lost its patent suit against Alcatel-Lucent (NYSE:ALU).
- Acacia had sued Alcatel for allegedly infringing its 4G patents. The companies settled an optical patent suit earlier this year. In 2012, Acacia bought mobile patent owner Adaptix for $160M.
- Earlier: Acacia drops 15.6%, gets halted
- Update (3:54PM ET): Acacia has confirmed the jury handling the suit ruled against it. "The jury returned a verdict that the asserted claims of U.S. Patent No. 6,870,808 were invalid and non-infringed. Adaptix, Inc. is currently studying the verdict to determine whether it will be filing an appeal." In addition to Alcatel-Lucent, Acacia/Adaptix had sued AT&T Mobility, Cellco Partnership, and Sprint Spectrum. Shares are down 20.6%.
Dec. 2, 2015, 4:08 AM
- Nokia (NYSE:NOK) shareholders are widely expected to approve the $16.6B takeover of French-American rival Alcatel-Lucent (NYSE:ALU) today at an extraordinary general meeting in Helsinki.
- The deal comes after the company obtained all necessary regulatory approvals last month from the U.S., France and China.
- Once the world's top mobile phone maker, Nokia hopes the merger will help it become the number one network equipment/service provider, with a combined revenue of nearly €25B ($26.5B).
Dec. 1, 2015, 5:34 PM
Dec. 1, 2015, 9:40 AM
- Credit Suisse's Kulbinder Garcha has upgraded Nokia (NOK +2.7%) and Alcatel-Lucent (ALU +2.4%) to Outperform ahead of the closing of their merger (set to occur in 1H16), and respectively hiked his targets to €9 ($9.54) and €4.95 ($5.25). Rival Ericsson (ERIC -1.7%) has been downgraded to Underperform, with its target cut to SKR75 ($8.65).
- Garcha expects Nokia/Alcatel to achieve significantly greater cost synergies than what management has forecast, as Nokia applies its "operational discipline" to Alcatel businesses. €1.7B/year worth of synergies are deemed possible by 2018 (guidance is for €900M), with €1.1B obtained by eliminating duplicate mobile infrastructure operating expenses and €480M by moving work to lower-cost regions. Altogether, he thinks the combined company's op. income (EBIT) could nearly double by 2018 to €4.3B.
- Regarding Ericsson, Garcha expects weak mobile infrastructure capex - he respectively forecasts 3% and 4% declines for 2016 and 2017 - to lead the company's revenue to drop 2% and 1% over the next two years. He also considers Street expectations for savings from cost-cutting efforts to be too high.
- Separately, Nokia has launched OZO, its 360-degree virtual reality camera array for professionals. Ozo, which will compete against a GoPro (NASDAQ:GPRO) VR array, sports eight cameras that each record at a 2K x 2K resolution, along with eight microphones and 500GB of storage. It's expected to ship in Q1, and will sell for a steep $60K.
- Last month: Ericsson slumps, takes Nokia/Alcatel with it after providing 2014-2018 growth outlook
Nov. 10, 2015, 1:33 PM
- At its Capital Markets Day, Ericsson (ERIC -6.5%) forecast its total addressable market will see a 2%-4% CAGR from 2014-2018, below the 3%-5% CAGR it forecast for 2013-2017 a year ago.
- The network equipment market - Ericsson's equipment sales skew heavily towards mobile - is expected to see a 1%-3% CAGR, the telecom services market a 3%-5% CAGR, and the support solutions market a 7%-9% CAGR. Year-ago forecasts for 2013-2017 were respectively at 2%-4%, 4%-6%, and 7%-9%.
- Ericsson aims to outpace its addressable market's growth via investments in "targeted areas" such as cloud services, IP networking, TV/media equipment, and carrier OSS/BSS software. The company forecasts a 10% CAGR for targeted areas. On a trailing 12 month basis, revenue from targeted areas totals SEK45B ($5.2B), up from SEK35B a year ago.
- By 2020, Ericsson wants to get ~20%-25% of its revenue from non-carrier customers, up from ~10% in 2014. It also wants to get over 75% of its revenue from services and software, up from 66% in 2014. A restructuring that was announced last year and aims for SEK9B ($1.03B) in annual savings by 2017 is said to be on track.
- Rivals Nokia (NOK -2.7%) and Alcatel-Lucent (ALU -2.6%), set to become one company in 1H16, are also off. Ericsson's forecasts come a day after the company announced a major partnership with switch/router giant Cisco, a deal viewed in part as an attempt to counter Nokia/Alcatel. Cisco rival Juniper, long the subject of Ericsson M&A speculation, sold off in response.
Oct. 29, 2015, 9:13 AM| Oct. 29, 2015, 9:13 AM
Oct. 29, 2015, 6:01 AM
- Alcatel-Lucent (NYSE:ALU): Q3 EPS of -$0.08 misses by $0.05.
- Revenue of €3.43B (+5.5% Y/Y).
Oct. 28, 2015, 5:30 PM
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Oct. 21, 2015, 12:10 PM
- With China's Ministry of Commerce having approved earlier this week (follows an August announcement regarding a JV between Nokia and China Huaxin) and France's Ministry of Economy having signed off today, Nokia (NOK +0.4%) states it has received all the regulatory approvals needed for its all-stock purchase of Alcatel-Lucent (ALU +0.7%) to proceed with its exchange offer to Alcatel shareholders.
- As previously announced, Nokia is offering 0.55 shares for each Alcatel share. 50% of Alcatel shares need to be tendered - settlement is expected to happen in Q1 - and Nokia shareholders need to approve the deal.
- The post-merger company will contain a Mobile Networks unit consisting of Nokia/Alcatel's mobile infrastructure hardware and software; a Fixed Networks unit containing Alcatel's broadband access products; an Applications & Analytics unit containing both companies' telecom software and analytics assets, an IP/Optical unit containing Alcatel's routing, optical transport, and IP video hardware, as well as Alcatel SDN software startup Nuage; and the Nokia Technologies IP licensing/R&D unit.
- Both Nokia and Alcatel's Q3 reports arrive on Oct. 29.
Oct. 9, 2015, 8:50 PM
- Alcatel-Lucent (NYSE:ALU) will be the partner with Deutsche Telekom (OTCQX:DTEGY) on the ground side of the hybrid European Aviation Network.
- It'll handle the LTE deployment on a combination LTE/satellite service, and says it's run test flights of such a network with Deutsche Telekom. Last month Deutsche Telekom came to a partnership with Inmarsat (OTCPK:IMASY) to provide in-flight broadband.
- Inmarsat's S-band satellite will provide service in the same frequency as a new LTE ground network that DT will run.
- Lufthansa is set to be the first airline to test the hybrid service, in 2017.
Oct. 7, 2015, 3:46 AM
- Nokia (NYSE:NOK) executives are set to dominate the new leadership team that will arise following its proposed acquisition of Alcatel-Lucent (NYSE:ALU).
- Chief Financial Officer Timo Ihamuotila will stay in his job and altogether 10 out of a total 13 members in the planned leadership group will come from Nokia.
- The €15.6B all-share acquisition is still on track to close in the first half of 2016.
Sep. 23, 2015, 4:16 PM
- Nokia (NYSE:NOK) finished up 2% in U.S. trading after gaining French approval for its €15.6B merger with Alcatel-Lucent (ALU +2%), an OK it secured by committing to R&D work in France.
- The company will use Alcatel-Lucent's French facilities to work on technologies including 5G and small cells, cyber-security and privacy, and optical transmission, among others. It will also establish a long-term investment fund of about €100M for research.
- Progress with approvals is "remarkable," Nokia CEO Rajeev Suri said, and months ahead of a planned 2016 closing. The key remaining approval is to come from China; Nokia moved to smooth that road by creating a joint venture with China Huaxin.
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