Nokia Corporation (ADR) (NYSE:NOK) is suffering a beating Thursday in the wake of a quarterly earnings report that is being seen as disappointing across the markets – mainly due to slumping overall sales numbers and a precipitous drop in feature phones which more than offset the increase in high-end Lumia smartphone sales. In an earlier post, we broke down from the report why we think we’re still somewhat bullish on Nokia – at least in the short-term – and now we’d like to spend a moment or two looking at the company that is outside the handset sales area.
When it comes to tech companies, for many of them it can be all about the patents and the licensing of those patents. And back when Nokia Corporation (ADR) (NYSE:NOK) was the top handset maker in the world – at late as about 2005 – it had compiled one of the most impressive and robust patent portfolios known in the tech world, if not in any sector. One of the noteworthy addenda to come out of Nokia‘s earnings conference call Thursday was its intellectual property base and the potential for major licensing revenue over the rest of this year.
Image: Nokia Corporation (ADR) (NYSE:NOK)
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Nokia owns a portfolio of about 10,000 patents, and currently the company says it has licensing deals in place with at least 40 different companies that should provide some steady revenue at least through this year. Among the companies that hold Nokia patent licenses are Apple Inc. (NASDAQ:AAPL) and Research in Motion Ltd. (NASDAQ:BBRY) – a k a BlackBerry. In addition, Nokia Corporation (ADR) (NYSE:NOK) is currently pursuing some patent litigation, most notably against handset competitor HTC.
When asked about IP and what might be coming, Elop said on the conference call Thursday, “It is very important to protect what we’re doing and make sure (companies) are paying their fair share. … (W)hen there is a significant shift in vendor market share, … that tends to create significant opportunities. We are watching where we can take advantage of that, and we’ll be watching that closely.”
There is little question in the tech sector that Nokia Corporation (ADR) (NYSE:NOK) is still a significant player due to its patent portfolio and its licensing of those patents. In fact, Google Inc. (NASDAQ:GOOG) has been trying to initiate an industry standard for voice technology, but Nokia owns that patent and is not willing (so far) to license that out as a standard-essential entity. That push will likely rage on, and Nokia could certainly bide its time and see that tech progress to the point where its patent grows in value. And considering Google’s overall market strength, once could certainly see that being a lucrative license for Nokia if and when it decides to make the deal.
What are your thoughts? Let us know in the comments section below.
DISCLOSURE: I own no positions in any stock mentioned.