Nokia's (NOK) Strange, But Likely Suitor
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As each day passes it appears Nokia (NYSE: NOK) is getting closer and closer to its death bed. However, on thing could save the beleaguered mobile phone giant - a takeover.
Looking at potential suitors, Microsoft (Nasdaq: MSFT) sticks out as the most likely since the two are close partners with Nokia adopting Windows Phone as its principal smartphone strategy. Another possible suitors for Nokia is Samsung.
One name that likely won't come up in takeover conversations is Apple (Nasdaq: AAPL), although this may make the most sense of all.
Importantly, after lawsuits back and fourth in 2009 and 2010, in June 2011 Apple and Nokia agreed on a settlement whereby Apple gave Nokia a one-time payment and on-going royalties to be paid by Apple to Nokia for the term of the agreement.
While terms of the deal were not disclosed, it was reported that Nokia received a one-time payment of EUR 800 million but more importantly is getting ongoing royalties of $10 per phone.
Looking at the number of iPhones Apple's sells and the royalties for Nokia are adding up fast.
Apple sold 35.1 million iPhones in the March quarter and could sell 120-130 million this fiscal year. This could net Nokia a cool $1.2-$1.3 billion. With the iPhone 5 and international adoptions, the momentum for the device should continue. By 2015, analysts see the company selling over 200 million iPhones - or $2 billion for Nokia.
Over the next 5 years, Nokia could collect about $9 billion in royalties from Apple.
With the market cap of Nokia currently sitting at $7.9 billion wouldn't it make sense for Apple to buy the entire company now?
Looking at potential suitors, Microsoft (Nasdaq: MSFT) sticks out as the most likely since the two are close partners with Nokia adopting Windows Phone as its principal smartphone strategy. Another possible suitors for Nokia is Samsung.
One name that likely won't come up in takeover conversations is Apple (Nasdaq: AAPL), although this may make the most sense of all.
Importantly, after lawsuits back and fourth in 2009 and 2010, in June 2011 Apple and Nokia agreed on a settlement whereby Apple gave Nokia a one-time payment and on-going royalties to be paid by Apple to Nokia for the term of the agreement.
While terms of the deal were not disclosed, it was reported that Nokia received a one-time payment of EUR 800 million but more importantly is getting ongoing royalties of $10 per phone.
Looking at the number of iPhones Apple's sells and the royalties for Nokia are adding up fast.
Apple sold 35.1 million iPhones in the March quarter and could sell 120-130 million this fiscal year. This could net Nokia a cool $1.2-$1.3 billion. With the iPhone 5 and international adoptions, the momentum for the device should continue. By 2015, analysts see the company selling over 200 million iPhones - or $2 billion for Nokia.
Over the next 5 years, Nokia could collect about $9 billion in royalties from Apple.
With the market cap of Nokia currently sitting at $7.9 billion wouldn't it make sense for Apple to buy the entire company now?
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