Nokia revealed it no longer expects to meet its outlook for its financial full year 2023 as licensing renewal discussions continue to drag on, with a resolution not expected until some point in 2024.
The Finnish vendor, which is due to report its fourth quarter and full year financials on 25 January, stated a resolution will now benefit its financial performance in 2024, and it will factor in associated catch-up payments.
The company said the development combined with continued customer spending constraints in the quarter means it will not meet its 2023 targets in relation to net sales, comparable operating margin and free cash flow.
Patent rows
Nokia noted while there had been intense negotiations between relevant parties and courts around the world, the company has opted to “prioritise protecting the value of its patent portfolio versus achieving certain timelines for resolution”.
It did not disclose which licensing agreements are currently outstanding or which parties they are negotiating with but notably it has been engaged in a long-running patent row with Oppo.
Around €140 billion has been invested in R&D for Nokia’s patent portfolio, which comprises of approximately 20,000 patents of which more than 5,500 are essential for 5G. Notably, it signed a long-term licensing agreement with Apple in July, as its existing agreement with the iPhone maker was due to expire.
Regarding its Q4 2023 performance to date, Nokia added net sales are expected to show a significant improvement sequentially. However, it did note the quarter had proved challenging due to ongoing customer spending constraints and “the recently communicated customer purchasing decision”.
The latter point refers to AT&T’s decision to hand Nokia rival Ericsson a $14 billion bumper open RAN contract.
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