The $2 billion bite: Apple pays up huge settlement to Nokia in patent dispute

Apple's latest patent spat with Nokia has resulted in a $2 billion upfront payment from the iPhone maker, a colossal sum that seems to indicate Apple was eager to avoid a protracted and ugly dispute that could rival the one it had with Samsung.

Details of the settlement, first announced back in May this year, without the disclosure of a financial amount or the new licensing terms, were spotted in Nokia's second quarter earnings release by the blog Nokiamob. The company said that this will be a one-time payment.

TechCrunch had said in a report on Friday, Nokia will not get $2 billion every quarter -- this was non-recurring catch-up revenue and Nokia hasn't said what it plans to do with all this cash.

The patents row between Nokia and Apple had escalated in December last year and was settled in May. Nokia has received a $2 billion upfront cash payment from Cupertino-based tech company as part of the settlement terms.

The spat began last year when the tech giants locked horns over patents, with Apple filing an anti-trust lawsuit against third-party companies Patent Assertion Entities (PAEs) that act on Nokia's behalf, and the Finland-based firm suing Apple directly.

The Cupertino-based tech giant had accused Nokia of conspiring with PAEs patent assertion entity Acacia Research and Conversant Property Management in an "illegal patent transfer scheme" to wring money out of Apple because Nokia's cellphone business was failing. Amid the escalating patents row with Finnish smartphone maker Nokia, Apple had also pulled all products made by Withings — a French company and now a Nokia subsidiary — from Apple Stores, be it online or retail.

Nokia said on Saturday while announcing its results in an IRS filing that it has filed a suit directly against Apple in Europe and the US, claiming the company is still infringing on its patents.

The lawsuit covers 32 patents, including display, user interface, software and video-coding technology.

Nokia's losses pruned to €433 million

Nokia in an IFRS filing on Saturday reported €5.629 billion in revenue and €441 million in profit during the second quarter of 2017. The comany had overall operating losses of €433 million on its books, which is a decrease compared to the loss of €667 million a year ago and €473 in Q1 2017. In Q2, Nokia acquired Comptel, had costs related to integration of Alcatel-Lucent, and paid €840 million to shareholders.

Nokia Technologies reported €369 million in revenues, a 90 percent increase year-on-year (YoY)  and 49 percent increase quarter-on-quarter (QoQ), and €230 million in profits (158 percent up YoY, 98 percent up QoQ).

The company said that revenues of Nokia Technologies were increased thanks to a the one-time Apple payment for patents, offset by lower licensing revenue from some partners. Nokia said that €70 million were catch-up sales from the previous quarter.

Digital Health and Digital Media (OZO+Withings) posted €12 million in revenue, but HMD was just mentioned, with no numbers given. Nokia also announced that it expects to start receiving royalties from Xiaomi from Q4 this year, the blog Nokiamob reported.

In its IFRS filing, the company mentioned "costs related to the acquisition of Alcatel-Lucent and related integration, goodwill impairment charges, intangible asset amortisation and other purchase price fair value adjustments, restructuring and associated charges and certain other items that may not be indicative of Nokia's underlying business performance".

In Q2 of 2017, the "Networks" business declined 5 percent to €4.971 billion year-on-year (YoY), but grew 1 percent quarter-on-quarter (Q0Q).

Even though Nokia Networks revenues declined on a yearly basis, because of strong leadership in restructuring and optimisation of product portfolio, the company said that it decreased the "cost of sales" and increased the profitability of its core business, but the declining market definitely makes things harder.

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