Nokia Offloads IP Assets - Analyst Blog


Finnish handset manufacturer Nokia Corporation ( NOK ), has sold 125 of its patents to intellectual property (IP) investment and advisory firm, Pendrell Corporation. However, none of the firms disclosed any financial details of the deal.

Most of the assets that Nokia has sold include patents for SD cards, embedded flash, flash storage and other memory technologies that are used in a wide variety of electronic devices. Among the 125 patents, 81 have been described as essential for application standards by the Finnish handset manufacturer.

Per the deal, Pendrell has created a subsidiary known as Helsinki Memory Technologies (HMT), solely to manage the new IP patents. HMT will work on the technological initiatives undertaken by Nokia and will provide the handset manufacturer with a license for every patent passed to HMT.

Nokia has the strongest patent portfolio in the wireless industry and has spent almost $62 billion in research and development in the last two decades. The company has become a pioneer in the development of portable and embedded memory technologies. Nokia's memory technologies are used in 8,000 different consumer electronic devices used by more than 400 brands worldwide. 

Nokia has been fighting market share loss against rival Apple Inc. 's ( AAPL ) iPhone and a gamut of other smartphone manufacturers who are using Google Inc. 's ( GOOG ) Android platform. In a bid to beat this difficult situation the company is trimming its work force by 10,000, downsizing its research and development unit and offloading its non-core units.

We believe that selling these technological assets will provide a win-win situation for Nokia, as it will profit from Prendell's expertise in IP strategy and licensing and at the same time reap benefit from its huge investment made in research and development.

The combined market for these memory technologies is expected to touch $12 billion by the end of 2013, which could somewhat reduce Nokia's royalty revenues from licensing its IP patents.

Nokia currently carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Other Stock to consider in the OEM industry is Interdigital Inc. ( IDCC ), which currently carries a Zacks Rank #2 (Buy).

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NOKIA CP-ADR A (NOK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AAPL , GOOG , IDCC , IP , NOK

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