Nokia Inks Multi-Year Patent Licensing Agreement With OPPO

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Nokia CorporationNOK recently announced that it has inked a patent licensing agreement with OPPO Electronics Corporation, commonly referred to as OPPO, a consumer electronics and mobile communication firm based in China. The terms of the multi-year agreement were, however, kept undisclosed from public domain.

Over the past couple of years, the Finnish communication equipment manufacturer has entered into similar multi-year patent licensing agreements with various other Chinese smartphone manufacturers like Huawei and Xiaomi. The current deal with OPPO is an extension of these efforts, as China aggressively aims to develop smartphones with cutting-edge technologies.

Per the deal, OPPO would make fixed payments to Nokia over the license period. This would ensure a steady revenue stream for the company and likely have a positive impact on its balance sheet as money from patents is mostly profit. The company holds a significant number patents related to GSM, 3G radio and 4G LTE technologies. In addition, Nokia has patents related to Wi-Fi and video standards, as well as technologies that reduce the need for hardware components in a phone, improve radio reception, and enhance battery life.

Nokia is well-positioned for the upcoming technology cycle given the strength of its end-to-end portfolio. The company's deal win rate looks encouraging, with notable successes in the key 5G markets of the United States and China. Its installed base of high-capacity AirScale product, which enables customers to quickly upgrade to 5G, is growing fast. The company is driving the transition of global enterprises into smart virtual networks by creating a single network for all services, converging mobile and fixed broadband, IP routing and optical networks with the software and services to manage those.

Leveraging state-of-the-art technology, Nokia is transforming the way people and things communicate, and connect with each other. These include seamless transition to 5G technology, ultra broadband access, IP and Software Defined Networking, cloud applications, Internet of Things, as well as security platforms, data analytics, and sensors. With diligent execution of operational plans, Nokia recorded an average return of 9.6% in the past year, while the industry declined 0.3%.

Nokia remains focused on its strategy that hinges on four strategic priorities. The first priority of the company is to lead in high-performance end-to-end networks with its communication service provider customers. The second priority is based on its relentless pursuit to expand network sales to select vertical markets, specifically energy, transportation, public sector, technical extra-large enterprises and webscale players, such as Google and Amazon. Building a strong standalone software business remains the third strategic priority of the company. The fourth pillar aims to create new business and licensing opportunities in the consumer ecosystem.

In order to strengthen the company's leading position in the market, Nokia facilitates its customers to move away from an economy-of-scale network operating model to demand-driven operations, by offering easy programmability and flexible automation needed to support dynamic operations, reduce complexity and improve efficiency. The company is continuously expanding its business into targeted, high-growth and high-margin vertical markets in a bid to address growth opportunities beyond Nokia's traditional primary markets. Rollouts of next-generation 5G networks are anticipated to improve market conditions significantly in 2019 and 2020.

Nokia currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are Comtech Telecommunications Corp. CMTL , Juniper Networks, Inc. JNPR and Harris Corporation HRS . While Comtech Telecommunications sports a Zacks Rank #1 (Strong Buy), Juniper Networks and Harris carry a Zacks Rank of 2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Comtech Telecommunications exceeded estimates in each of preceding four quarters, the average positive earnings surprise being 136%.

Juniper Networks surpassed estimates in each of the trailing four quarters, the average positive earnings surprise being 11%.

Harris outpaced estimates in each of the preceding four quarters, the average earnings surprise being 7.1%.

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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 Nasdaq, Inc.

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

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