Nokia to Design, License Handsets Next Year
Nokia (NOK) plans to design and license handsets late in 2016 after the expiration of an agreement it signed with Microsoft (MSFT) tied to the $7.1 billion sale of its mobile business in 2013 to the software giant.
The Finnish company has indicated on a number of occasions that it intends to pursue a brand licensing strategy to re-enter the smartphone market.
As Reuters reported, Nokia chief executive Rajeev Suri told Germany’s Manager Magazin the company “will look for suitable partners. Microsoft makes mobile phones. We would simply design them and then make the brand name available to license.”
At the end of this year, Nokia will be free and clear of legal constraints associated with the September, 2013, $7.1 billion sale of its mobile business to Microsoft to sell phones under its own brand. And, by Q3 next year it will be able to license its brand for others to use.
In late April, Nokia denied reports that it intended to manufacture branded smartphones for the consumer market as early as next year, suggesting that its handset licensing and branding strategy had been misinterpreted.
“Nokia notes recent news reports claiming the company communicated an intention to manufacture consumer handsets out of a R&D facility in China,” Nokia said in a statement posted on its website at the time. “These reports are false,” the company said. “Nokia reiterates it currently has no plans to manufacture or sell consumer handsets.”
However, Nokia did confirm that it’s mulling re-entering the smartphone market through a brand-licensing strategy.
Last November, Sebastian Nystrom, Nokia Technologies product head, told Reuters that once the vendor is legally free to sell phones under its own brand name and license its handset technology to others, it “would be crazy not to look at that opportunity. Of course we will look at it.”
Nokia in April said it will acquire French networking equipment maker Alcatel-Lucent (ALU) for some $16.6 billion in an all share deal the Finnish manufacturer said positions the combined entity to capitalize on technological innovations such as the Internet of Things (IoT) and the transition to the cloud.
The combined company will be called Nokia and maintain headquarters in Finland. Risto Siilasmaa will serve as Nokia’s chairman and Rajeev Suri its chief executive officer.
Based on a 1H 2016 closing, the companies projected the deal will produce $25.9 billion in sales, operating profit of $320 million and, by 2019 about $950 million in cost savings annually.
