Nokia (NOK) Patent Dispute Could Cost Apple (AAPL) $1 Billion

Analysts are beginning to calculate what a lose in a patent lawsuit brought by Nokia (NYSE:NOK) could cost Apple (NASDAQ:AAPL). Piper Jaffray analyst Gene Munster believes that the figure could be as much as $2 per iPhone. That would put Apple’s liability at $200 million for the handsets it has sold so far.

Munster’s figure is at the lower end of estimates. Nokia claims that ten of its patents have been violated.

Neil Mawston at Strategy Analytics says that the payout for the 34 million iPhones shipped already could be as high as $1 billion. Apple has net income of $1.67 billion last quarter, so the charge against its earnings could be considerable.

More and more analysts and legal experts are coming to the conclusion that Apple does have significant liabilities for misuse of Nokia IP. That raises the issue of why Apple would risk any part of its iPhone franchise by failing to settle the issue months ago. Industry rumors are that the two companies have been negotiating patent payments for a year.

“It is almost inconceivable that someone can produce a mobile phone without using Nokia patented technologies,” said Ben Wood, research director at CCS Insight told Reuters.

Apple sold over seven million iPhones last quarter. Now that it has resellers in most of Europe and China, that sales figure is likely to climb. Apple may be digging a financial liability hole with each passing month. Analysts should be not surprised it a settlement costs Apple a number large enough to put a big dent in EPS.

Douglas A. McIntyre