Patents: After Chinese, Nokia is coming after Indian manufacturers

Together with the publication of their Q4 and full year 2017 financial report, Nokia also made a conference call with investors and analysts. Nokia’s CEO Rajeev Suri and CFO Kristian Pullola summarized Nokia’s results and described in more details some aspects they think are important for the company to communicate with the public.

The most intriguing things I read from the conference’s transcript provided by SeekingAlpha is Nokia’s positive outlook for patent licensing business of Nokia Technologies. Nokia executive expects 10% annual growth of the patent licensing business, which is frankly quite optimistic. To be more precise, we are talking here about recurring sales that were €1.3 billion in 2017.

Finally, a few words on our guidance on our licensing business. Given the progress we have made over the past 2 years and the experience we have gained, we are now comfortable providing some longer-term guidance. We expect our recurring licensing net sales to grow at a compound annual growth rate of approximately 10% over the 3-year period ending 2020. At the same time, we expect the operating margin for our licensing business to expand to approximately 85% for the full year of 2020 partly due to operational efficiencies.

David Mulholland of UBS asked Suri how they plan to achieve such growth. Suri explained that Nokia, after signing deal with major Chinese player like Xiaomi and Huawei, and expecting to sign deals with other Chinese mobile manufacturers, will focus on India and local manufacturers there.

After that Nokia expects revenue from car manufacturers, IoT, consumer electronics, broadcast and similar categories, coupled with revenue from brand licensing.

Considering the soon deployment of 5G in 2019 and 2020, we can say that bright(er) future is ahead of Nokia’s Network unit, and if we count how confident Nokia is in patent business, Finns will have a good time on the market.

Source: Seeking Alpha