Is Juniper The Next Takeover Target?
Chris DeMuth Jr. • 64 Comments
Chris DeMuth Jr. • 64 Comments
Wed, Jul. 13, 3:41 PM
- Nokia (NOK +5.8%) and Samsung (OTC:SSNLF) have announced an extension of their existing deal allowing both companies to share in specific patent portfolios of the other.
- "The agreement announced today expands access for each company to patented technologies of the other and reinforces Nokia's leadership in technologies for the programmable world. With this expansion, Nokia expects a positive impact to the net sales of Nokia Technologies starting from the third quarter of 2016," reads the release.
- Additionally: "With this expanded agreement, Nokia Technologies' annualized net sales related to patent and brand licensing is expected to grow to a run rate of approximately EUR 950 million by the end of 2016."
- Ramzi Haidamus, president of Nokia Technologies, weighed in as well: "With intellectual property portfolios from Nokia Technologies, Nokia Networks and Alcatel-Lucent, Nokia has a wealth of technologies relevant to mobile devices and beyond. We welcome this expanded agreement with Samsung which recognizes the strength of our assets, and we continue to pursue new licensing opportunities across a number of diverse industries."
- BMO Capital Markets has recently reiterated an Outperform rating on Nokia with a $7 target ($5.92 current price).
Wed, Jul. 13, 9:21 AM
Fri, Jun. 24, 9:11 AM
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Mon, Jun. 13, 10:48 AM
- Nokia (NOK +2.6%) has signed a one-year, €1.36B ($1.5B) framework agreement with China Mobile.
- As part of the framework agreement, Nokia will "continue delivery of mobile, fixed, IP routing, optical transport, customer experience management technologies and operational support as well as global services." Also, China Mobile will be the first carrier to deploy Nokia's AirScale base stations, which support multiple air interfaces (including, eventually, 5G radios).
- Both Nokia and recently-acquired Alcatel-Lucent have been suppliers to China Mobile for some time. However, local equipment vendors Huawei and ZTE have an outsized share of the Chinese mobile infrastructure market.
Wed, May 25, 12:53 PM
- "If you are looking for revenue growth, stop reading. But if you're looking for a bombed-out stock with a reasonable valuation, solid management, strong balance sheet, a lot of bad news behind it, and significant optionality, read on," writes CLSA's Avi Silver, upgrading Nokia (NOK +4%) to Outperform from Underperform.
- Silver, who has upped his target by $1 to $6.25, also thinks earnings estimates could rise as Nokia reaps synergies related to the Alcatel-Lucent merger, and is upbeat about the company's guidance for a 7%+ Networks division op. margin.
- The upgrade comes two weeks after Nokia sold off in response to its Q1 report. and shortly after a Finnish union said the company could cut 10K-15K jobs globally.
Wed, May 18, 12:31 PM
- In tandem with Microsoft's $350M deal to sell its feature phone business (acquired from Nokia in 2014, along with the Lumia smartphone business) to Foxconn unit FIH Mobile and HMD Global (a new company based out of Finland), Nokia (NOK +2.4%) is granting HMD Global an exclusive 10-year license to create Nokia-branded phones and tablets.
- The deal involves the licensing of both Nokia's brand and IP. The company will receive royalties from HMD on sales of Nokia-branded hardware. Notably, HMD will provide a line of Nokia-branded Android phones and tablets to go with feature phones, and will have access to FIH Global's sales/distribution, manufacturing, and engineering resources.
- The announcement comes 11 months after Nokia said it plans to design and license phones that would be manufactured and sold by third parties. Nokia is higher a day after closing just $0.03 above a 52-week low of $5.08 (set on Monday).
Thu, May 12, 3:51 PM
- In a private transaction, Nokia (NOK -1.6%) has agreed to acquire 72.99M of €688.43M Alcatel-Lucent convertible bonds (due January 2019), and 19.94M of the €460.29M convertibles (due January 2020).
- Nokia's paying an aggregate of €418.95M in cash.
- The move means that Nokia will own 94.64% of share capital, and 94.57% of voting rights, in Alcatel-Lucent -- coming to 94.17% of shares (fully diluted).
- Now read Is It Time To Buy Nokia? »
Mon, Apr. 25, 7:45 PM
- Disney (DIS +0.8%) has teamed up with Nokia (NOK -2.6%) to set its course for virtual reality.
- The entertainment giant has a multi-year deal to use Nokia's OZO 360-degree cameras for varying vectors from its films to its marketing materials, and it even used them to make VR extras for The Jungle Book.
- The cameras can help fill a well of content that could be used to keep Facebook's Oculus Rift and the HTC Vive humming. Nokia introduced the $60,000 OZO in November, though rivals that could include GoPro, Lytro and Jaunt may be following up soon with competing models.
- Now read Nokia: It's A Yield Play »
Thu, Feb. 11, 12:37 PM
- Though the S&P is down 1.9% and the Euro Stoxx 50 3.9%, Alcatel-Lucent (ALU +3.6%) and (to a lesser extent) Nokia (NOK +0.4%) remain higher after delivering Q4 EPS beats aided by a weak euro and substantial margin gains.
- Nokia's Q4 financials: Gross margin rose 560 bps Y/Y to 46.4%, and op. margin 600 bps to 20.3%. Networks op. margin rose 60 bps to 14.6%; Technologies op. margin rose 2820 bps to 79.9%, aided by "non-recurring adjustments from an existing agreement" (Samsung?). R&D was 15% of revenue, and SG&A 11% (same as a year ago).
Op. cash flow rose to €460M from €224M a year ago. With the help of the HERE sale, Nokia ended Q4 with €7.8B in net cash and other liquid assets. Forex provided a 600 bps revenue growth boost (+3% vs. -3%).
- Alcatel's Q4 financials: Gross margin rose 470 bps Y/Y to 39.4%. Op. margin rose 580 bps to 13.5%. SG&A spend rose 14% Y/Y to €477M, and R&D spend 4% to €603M.
Excluding restructuring cash outlays, free cash flow rose to €1.14B from €420M. Net cash rose to €1.4B. Forex provided a 900 bps revenue growth boost (+13% vs. +4%).
- Top-line performance: Nokia Networks revenue fell 5% Y/Y to €3.2B, with Mobile Broadband dropping 2% and Global Services 6%. With Samsung's help, Nokia Technologies revenue rose 170% to €403M.
Alcatel-Lucent's IP routing (carrier routers, gaining share) revenue rose 17% to €778M, IP transport (optical networking) 19% to €772M, and IP platforms (telecom software) 2% to €497M. Wireless access (mobile infrastructure) revenue rose 14% to €1.38B, and fixed access (broadband equipment) 21% to €666M. Managed services fell 36% to €61M, and licensing 33% to €10M.
- Guidance: Nokia has declined to provide formal guidance for Networks and Technologies, while citing the Alcatel deal for the former. The company does say it expects a "flattish capex environment" for its addressable market in 2016, and a declining 2016 wireless infrastructure market with a greater-than-normal Q1 seasonal decline.
Nokia is still aiming for €900M/year in merger cost synergies in 2018, and now forecasts achieving €200M/year in interest expense savings in 2016; prior guidance was for 2017.
- Nokia: Q4 results, earnings release (.pdf).
- Alcatel-Lucent: Q4 results, earnings release
- Update: Also of note: Nokia's board is proposing a €0.10/share special dividend (€600M payout) to go with a €0.16/share 2015 dividend (€960M payout).
Mon, Feb. 1, 12:07 PM
- 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)
Dec. 28, 2015, 5:39 PM
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. 16, 2015, 10:20 AM
- Amid widespread solvency fears, DragonWave (NASDAQ:DRWI) has overhauled its reseller deal with Nokia (NYSE:NOK), while keeping the companies' "global frame agreements" in place.
- The specifics: 1) Nokia will remain DragonWave's main reseller channel for its Harmony Radio products. 2) DragonWave will continue providing software maintenance and hardware support to Nokia for joint product deployments. 3) The companies "may mutually agree on a case by case basis to address additional future specific customer requests of new DragonWave products through Nokia."
- The "Nokia channel" accounted for 37% of DragonWave's August quarter revenue of $26.9M, and 50% of its FQ1 revenue. The deal restructuring comes as Nokia gets set to merge with Alcatel-Lucent, a move that had stoked fears Nokia would abandon DragonWave's RF backhaul offerings for Alcatel's.
- DragonWave's market cap remains below $9M.
Dec. 1, 2015, 5:34 PM
Nokia Oyj provides network infrastructure, technology and software services. It operates through four segments: Mobile Broadband, Global Services, HERE, and Nokia Technologies. The Mobile Broadband offers network solutions for mobile voice and data services through its Radio and Core clusters... More
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