As you probably know, Microsoft Corporation (NASDAQ:MSFT) has a partnership with Nokia Corporation (ADR) (NYSE:NOK). Under the agreement, Nokia Corporation (ADR) (NYSE:NOK) is set to pay Microsoft $650 million to use its Windows Phone operating system.
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Even to Microsoft Corporation (NASDAQ:MSFT) this is no small change.
Of course, this money is going to be paid over the lifetime of the entire agreement.
With all this in mind, there is something strange going on. Here is what CNET had to say:
“Curiously, Nokia has yet to take a real financial hit from the licensing fees it is required to pay Microsoft because of the platform support fees. Nokia said that Microsoft makes a quarterly payment of $250 million, and that it was actually a net positive recipient of funds last year.”
In other words, despite the fact that Nokia Corporation (ADR) (NYSE:NOK) owes Microsoft money the company is still receiving support payments for the time being.
There used to be a time when Nokia Corporation (ADR) (NYSE:NOK) did not need the support of other companies to take charge in the smartphone space. However, those days have come and gone thanks to intense competition from the likes of Microsoft, Google, and Apple.
Right now, Nokia is hoping to break into the Chinese market. The article goes on to say:
“One area that Nokia is focusing on is the Chinese market, which the company conceded in the filing has been a "very difficult market for us." In the past, the company had worked with a network of distributors and resellers, but now carriers are bundling devices and data plans together with an emphasis on lower-priced smartphones, which it said hurt Nokia last year.”
It appears that Nokia Corporation (ADR) (NYSE:NOK) and Microsoft Corporation (NASDAQ:MSFT) are on good working terms, and that both sides are benefiting from its relationship. Do you believe this to be true? Share your thoughts in the comment section below.
DISCLOSURE: I have no positions in any stock mentioned.
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