Nokia Has a Valuable and Relatively Young US Patent Portfolio
According to a Wall Street Journal report yesterday, Nokia’s patent portfolio is being valued at “$6 billion” by analysts. As the company struggles to keep pace with other players in the mobile and wireless space, Nokia’s CEO Stephen Elop suggested that the company may start looking at its patent portfolio to “generate cash”.
Envision IP performed a cursory review of Nokia’s patent portfolio, and identified 15,897 issued US patents, and 4,453 pending US patent applications assigned to Nokia. In addition, Nokia holds over 20,000 foreign patents and pending applications, with a majority of those being in Europe.
As far as Nokia’s US patents are concerned, these patents have an average remaining term of 13.8 years, which is quite lengthy, given the fact that Nokia reportedly stands to earn Euro 500 million ($~615 million) from licensing deals this year onwards.
It is unclear how much of Nokia’s reported licensing revenue stems from its US patent portfolio. However, assuming that at least half of the $615 million in yearly licensing revenue comes from Nokia’s US patent assets, Envision IP performed a discounted cash flow analysis to calculate the net present value of Nokia’s US patents.
We calculated Nokia’s US patent portfolio to be worth between $3.17 to $3.8 billion.
The variation in this range reflects the actual percentage of US patents that account for Nokia’s estimated future patent licensing revenue, and the percentage of Nokia’s patents that are related to wireless technology, and more importantly, deemed essential to 3GPP LTE and its underlying technologies. Also, this valuation does not account for Nokia’s immense European and other worldwide patents, nor does it take into account possible strategic motives for any potential acquirers.
Interestingly, while we do not believe there is any direct correlation between a company’s stock price and its patenting activity, Nokia’s US patent filing history since 2008 seems to mirror the decline in its stock price. This decrease in the filing of US patent applications suggests that Nokia has placed less focus and investment into research and development in recent years.