Nokia’s patent licensing deal with Samsung has expired in 2013 and when Nokia and Samsung renegotiate the deal terms, 2013 will be taken as reference year for calculations. Now as Samsung’s relevant revenue has grown to be 36 times of Nokia’s relevant revenue in 2013, the royalty that Nokia will receive from Samsung will be 36 times of what it received from the earlier deal with Samsung. During the time of inking of earlier deal in 2007, Nokia’s revenue was 2.2 times more than Samsung and thus this time around, Nokia may see much higher royalty out of its deal with Samsung. According to the analysts, even if Nokia gets 20 times of what it used to receive from earlier deal, it is huge!!
Similarly, Nokia may be able to get huge boost in royalty payment from Apple, when it renegotiates the current deal expiring in 2016. Apple has also gained 20 times in reference revenue as compared to Nokia in 2010.
Based on the above analysis, JPMorgan has Overweight rating on the Nokia stock with €8 price target.