31 July 2017
Reporter: Barney Dixon

Apple paid $1.7 billion to Nokia

Apple paid Nokia an up-front cash payment of approximately €1.7 billion as part of a settlement to end all outstanding litigation between the companies earlier this year.

According to Rajeev Suri, president and CEO of Nokia, speaking during Nokia’s Q2 2017 investor webcast, group level net sales in Q2 were up €5.6 billion, with its own technologies upping sales by 90 percent from the previous year.

Suri said this was “largely, but not completely, driven by our recently announced agreement with Apple”.

"Related to only the Apple litigation, we had expected to spend at a run rate of approximately €100 million annually, given the agreement, we should not see any Apple-related litigation costs in Q3, and going forward."

"Second, we got a substantial upfront cash payment of €1.7 billion from Apple, strengthening further our cash position. As said earlier, our plan is to provide more details on the intended use of cash in conjunction with our Q3 earnings."

Suri went on: "Instead of a simple patent licensing agreement, we have agreed on a more extensive business collaboration with Apple, providing potential for a meaningful uplift in our IP Routing, Optical Networks and Digital Health business units over time. Hence, the value of the agreement will be reflected partly as patent licensing net sales in Nokia Technologies, and partly as net sales in other Nokia business groups."

The settlement included a multi-year patent licensing deal and put a stop to litigation that spanned the US and Germany and saw Apple claim in federal court that Nokia had conspired with patent licensing companies to unlawfully extract royalties.

Nokia will now provide certain network infrastructure products and services to Apple, which has resumed carrying Nokia digital health products in its retail and online stories.

Apple announced that it had $256.8 billion in the bank at the end of Q1 2017.

Nokia signed a business collaboration and multi-year patent agreement with Chinese electronics company Xiaomi earlier in July.

That deal included a cross-licence to each company's cellular standard-essential patents, while Xiaomi also acquired patent assets from Nokia as part of the transaction.

Suri said when the agreement was announced: “Xiaomi is one of the world's leading smartphone manufacturers and we are delighted to have reached an agreement with them.”

“In addition to welcoming such a prominent global technology company to our family of patent licensees, we look forward to working together on a wide range of strategic projects.”

Like the deal with Apple, Nokia and Xiaomi will work on a number of business ventures together.

Nokia will provide network infrastructure equipment to web provider and data centre clients of Xiaomi, and they plan to explore opportunities for further cooperation in areas such as the internet of things, augmented and virtual reality, and artificial intelligence.

“As a company seeking to deliver more exciting technological innovations to the world, we are excited at the opportunity to work more closely with Nokia in future," said Lei Jun, chairman and CEO of Xiaomi.

“Xiaomi is committed to building sustainable, long-term partnerships with global technology leaders. Our collaboration with Nokia will enable us to tap on its leadership in building large, high performance networks and formidable strength in software and services.”

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