Apple Inc. (NASDAQ:AAPL) and Nokia Corporation have buried the hatchet on a legal dispute by signing an agreement to work together.
Shares in Apple rose 0.65% to US$153.99 in US pre-market trade while shares in Nokia gained 8.83% to €5.91 in Italy.
The two companies have agreed a multi-year patent license deal under which Nokia will provide network infrastructure product and services to Apple.
Nokia will receive an upfront cash payment and additional revenues from Apple starting from the current quarter. Details of the figures were not provided but analysts said revenue was likely to be much higher than a previous deal.
“We expect the revenues of Nokia Technologies to rise significantly following this agreement,” Liberum said. “The business collaboration may have partially helped compensate for a lower royalty rate in Apple's favour, but the longer term revenue upside for Nokia could be greater with this approach. Buy.”
The deal puts to rest an intellectual property dispute between the two, which was expected to drag on.
Nokia and Apple took legal action in December following the expiry of a patent licence between the companies last year. Nokia accused Apple of violating patents while the iPhone maker complained of being overcharged.
Without a new contract, Nokia cut its annual run-rate forecast in December for patent and brand licensing sales to €800mln from €950mln previously.
"(The agreement) moves our relationship with Apple from being adversaries in court to business partners," Nokia's Chief Legal Officer Maria Varsellona said in a statement.
Under the new deal, Apple will resume carrying Nokia digital health products in its retail and online stores. The two are also exploring future collaboration in digital health initiatives.
“We are pleased with this resolution of our dispute and we look forward to expanding our business relationship with Nokia,” said Jeff Williams, Apple’s chief operating officer.
Nokia's patents cover mobile phone technology that conserves battery life, reduces the need of hardware components, increases radio reception, helps in recovering lost devices and enables voice recognition.
Royalties from its patents represent a small slice of total revenue but licensing payments are highly profitable and Nokia's telecoms network equipment business is suffering from sector-wide decline.The network business contributes more than 90% to overall revenues.