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Will Sales Rise for Nokia Technologies in 3Q16 and Beyond?

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Expansion of cross-licensing agreement with Samsung

In July 2016, the Europe-based (EFA) Nokia (NOK) and Korea’s (EWY) Samsung (SSNLF) agreed to expand their patent cross license agreement. Nokia stated that annualized net sales related to patent and brand licensing is expected to grow at a run rate of approximately 950 million euros by the end of 2016. Nokia also expects it to positively impact sales from 3Q16.

Ramzi Haidamus, president of Nokia Technologies, said, “With intellectual property portfolios from Nokia Technologies, Nokia Networks and Alcatel-Lucent, Nokia has a wealth of technologies relevant to mobile devices and beyond.” Haidamus added, “We welcome this expanded agreement with Samsung which recognizes the strength of our assets, and we continue to pursue new licensing opportunities across a number of diverse industries.”

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Nokia closed the acquisition of Withings—a leader in the connected health revolution business segment. Withings has been a pioneer in the connected health market since the company launched its first product in 2009. This deal also gives Nokia an early position in this market and an opportunity to build future licensing income.

The acquisition was initially valued at $195 million or 170 million euros. Withings released a number of smartwatches. It accounts for almost 4% of the smartwatch market, according to Statista. The company’s products are carried by popular retailers like Best Buy (BBY).

How did the Nokia Technologies segment perform in 2Q16?

Nokia Technologies sales fell 11% YoY (year-over-year) in 2Q16. Excluding the impact of non-recurring items, revenue in this business rose 10% YoY in 2Q16.

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