#Nokia could earn $400 million per year for brand licencing
Platform for investment research Seeking Alpha published a “fearless forecast” of the benefits that the Finnish telecommunication giant Nokia could have from ‘going back to mobile’. As previously stated, Nokia is returning to the mobile market via an interesting scheme involving a newly-founded start-up HMD Global, and China’s manufacturing giant Foxconn (FIH Mobile).Nokia will receive royalties from HMD Global for brand usage on smartphones and tablets, and for patents. Nokia will also help HMD design and market Nokia-branded devices. FIH Mobile, a part of Foxconn, will do the manufacturing of the devices.
Seeking Alpha’s writer Motek Moyen optimistically predicts $400 million yearly royalties that HMD Global could end up paying for the usage of patents, and the Nokia brand. Moyen puts the licence per device price from $10 to $30, and estimates that HMD could sell 20 million devices per year, or at least in 2017. Some argue that Nokia-branded smartphones could sell up to 100 million devices in 2019, but it is hard to forecast anything because so many things are still unknown.
If we multiply the estimated number of devices sold (20 million) with the average ‘per device price’ of $20, Nokia could receive $400 million per year. This could potentially increase Nokia’s predicted profit for FY2017 from $2.5 billion to $2.9 billion, or 16%. Such results could have a positive impact on Nokia’s market value and stock price. Nokia shares are currently trading 20% lower than the average analyst price target ($5.80; $7.03), and a bump in profits could help drive the share value up to $10 in the next 18 months.
Proof: #Nokia on #Android won’t be another “generic smartphone” @nokiatech
We still have to wait and see what will the first Nokia-branded Android devices made by HMD look like. The quality and the pricing will have a huge role in Nokia’s return to the market. Huge interest for the Nokia brand exists, but the execution of the idea will play a crucial role, because history teaches us: It is not good enough to be the first, but you must be the best in an aspect to succeed.
What do You think? How much will Nokia benefit from the return to the mobile market? 🙂
