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How Much Did It Cost RIM to Pay Off Nokia?

About a month ago, Nokia (NYSE: NOK  ) filed suit against Research In Motion (NASDAQ: BBRY  ) related to the BlackBerry maker's use of WLAN technologies in Wi-Fi capable devices. Way back in 2003, the pair had entered into a cross-licensing agreement that included Nokia's standards-essential patents but the Finnish company argued that the Canadian company had gone too far.

A Swedish arbitration court sided with Nokia and said Research In Motion wasn't able to keep selling WLAN smartphones until it paid up royalties. At the time, the two hadn't inked terms but Research In Motion was still peddling its wares anyway, hence the breach of contract suit launched by Nokia. Just days ago, Nokia and Research In Motion said they had settled the Wi-Fi patent dispute and entered into a new patent license agreement, in which case Nokia would drop all of its pending actions in three different countries.

All Nokia said was that the deal involved a one-time payment as well as ongoing royalties, without elaborating beyond that. Well, now investors know.

Thanks to Research In Motion's most recent 6-K filing, the BlackBerry maker said the deal includes a lump sum payment of 50 million euros, or about $65 million. That figure was already factored in to its fiscal third quarter earnings, which included a bottom-line profit of just $9 million. At least Research In Motion was able to increase its cash positions by $600 million throughout the quarter to $2.9 billion.

There's no disclosure of how much Research In Motion may be paying Nokia in royalties, but at least Research In Motion was able to pay Nokia to go away. Both companies have more important things to focus their respective efforts on: their turnarounds.

Nokia's been struggling in a world of Apple and Android smartphone dominance. However, the company has banked its future on its next generation of Windows smartphones. Motley Fool analyst Charly Travers has created a new premium report that digs into both the opportunities and risks facing Nokia to help investors decide if the company is a buy or sell. To get started, simply click here now.

Read/Post Comments (2) | Recommend This Article (2)

Comments from our Foolish Readers

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  • Report this Comment On December 29, 2012, at 12:46 AM, RandomMeaning wrote:

    Here's one of the ways RIM is adding to their cash: by not paying their bills. Didn't work out so well for them this time though. Now they get to add legal costs to what they should have already been paying. That should tell you something about RIM's "leadership".

    And don't forget the big tax break the Canadian government gave to RIM so they could "beat" the Street's rather wimpy threshold. Will they get another helping hand next quarter?

  • Report this Comment On December 30, 2012, at 7:17 PM, EmergingGrowth wrote:

    If you want potential big upside for 2013, Nokia now is a stock to consider. The stock has come down more than 90%. Now, the stock is only below $4, and it used to be over $60.

    Many catalysts, such as China Mobile deal, RIM´s continuous royalty payment, the coming Verizon´s team work with Nokia etc. make Nokia a BUY now, or you will probably miss the train.

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