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Nokia will end up owing $650 million to Microsoft

In case you've just landed from another planet and didn't know, Microsoft and Nokia have a financial deal in place. According to this deal, Nokia uses Windows Phone on their smartphones and  receives money from Microsoft every quarter in the form of "platform support payments." At the same time, Nokia pays Microsoft some licensing fees for its mobile OS.

This is the deal that was set up between Stephen Elop, Nokia's CEO, and Microsoft back in 2011. But according to a financial report filed by Nokia, in the end, the Finnish company will end up paying an extra $650 million. That takes into consideration all the money the company receives from Microsoft which amounts to approximately $250 million every quarter. The official statement reads:

As a result, the remaining minimum software royalty commitment payments are expected to exceed the remaining platform support payments by a total of approximately EUR 0.5 billion over the remaining life of the agreement.  

The statement also mentions that for 2012 the amount of cash received from Microsoft was larger than the amount Nokia had to pay to license the OS and this added to the company's bottom line. The same is expected to happen in 2013, though the resulting profit will be less than it was last year.

Nokia also stated that it expects its smartphone and service business to outperform the general market and they expect a margin of at least 10 percent. The company is also aiming between 5-10 percent profit for its Nokia Siemens business.

Source: TechCrunch

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