Nokia's "One Time Payment"
Scratchy,
<< If Nokia is going to pay a one-time payment of $2 to $3.5 billion, we will know it by October 16, when Nokia releases its third quarter results. I don't want to speculate on the way Qualcomm handles the up-front payment, but I don't see any other alternative for Nokia than to book it as a one time item for the third quarter. And then we'll know. >>
You may be absolutely right (and that would be nice), but I'm not absolutely sure that you are, and I'm also not sure that the supposed "one-time" payment will necessarily be settled in a single quarter as opposed to 2 or more.
Did they note a one time payment in Q2 2006 when they settled with Interdigital from funds provisioned for potential IPR infringement? (I don't recall them doing that and in a cursory glance can't find one.)
¹"In April 2006 Nokia paid InterDigital $253 million." - Nokia 2006 20-F -
In the Qualcomm case I believe they have escrowed at least $20 million and perhaps a like sum each subsequent quarter), and in addition through the end of 2007 they had provisioned €545 million ($856 million) for potential IPR infringement (InterDigital, IPCom/Bosch, Qualcomm). Presumably these amounts are larger after Q2 earnings since none had gone away at Quarters end. Nokia increased its IPR Infringement Provisions by €261 ($428 million) in 2007. Presumably the increase was primarily intended to cover potential payments to QUALCOMM.
Assuming that Nokia and Qualcomm finalize the agreement, dot all 'i's and cross all 't's, and Nokia tenders the complete up front payment (agreed $$$ in arrears, plus a new licensing fee) prior to the end of Qualcomm's fiscal year, will that complete payment show as a one time payment in the unaudited quarterly earnings statement which will be mirrored in an 8K? The Nokia balance sheet will shows total provisions (with adds and deductions) but it does not break down provisions by category (Warranty, Tax, IPR, Restructuring, Other -- that's done on the audited annual financials and the annual US SEC 20-F that will be available ~March 2009.
Do we have a CPA here that has experience with IFRS accounting principles and reporting and even better one who has combed Nokia financials in the past looking at treatment of special items and provisions?
[Edit: I see others have made related comments (amortized payment, etc.) ... Thwe two companies will be bound by IFRS and GAAP, and within those bounds work with each other to choose a mutually benefical payment arrangement where their is flexibility.]
- Eric - |
