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From: Dexter Lives On8/16/2011 8:02:30 AM
   of 16774
 
The patent warfare amongst the giants is creating a huge market for Gladios IP....

Google Buys Motorola for ‘Superpower’ Status

By Susan Decker and Ian King - Aug 16, 2011 12:01 AM ET

Aug. 16 (Bloomberg) -- Michael Walliser, an analyst at Condor Capital Management, talks about Google Inc.'s agreement to buy Motorola Mobility Holdings Inc., and its implications for HTC Corp. and Samsung Electronics Co. Google said yesterday it will pay $12.5 billion for Motorola Mobility, purchasing more than 17,000 patents it can use to defend against allegations of infringement as competition accelerates in the $206.6 billion mobile-phone market. Walliser speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

Google Inc. (GOOG) is relying on its planned $12.5 billion purchase of Motorola Mobility Holdings Inc. to forestall patent litigation and force settlements with Apple Inc. (AAPL) and Microsoft Corp. (MSFT) over smartphone technology.

Google cited patent disputes as key to its agreement to buy Motorola Mobility, announced yesterday. Apple, maker of the iPhone, and Microsoft, developer of Windows Phone software, have targeted phones that run on Google’s best-selling Android system, including handsets built by Motorola Mobility, Samsung Electronics Co. and HTC Corp. (2498), in lawsuits worldwide.

Lacking its own trove of patents to vie with with Apple, Microsoft and other companies, Google and its hardware partners were targeted by suits aimed at slowing the adoption of Android smartphones. Adding the 17,000 patents of Motorola Mobility, which has been inventing mobile-phone technology since the industry began, may help Google stanch the onslaught.

“The analogy to a nuclear arms race and mutually assured destruction is compelling,” said Ron Laurie, managing director of Inflexion Point Strategy LLC, which counsels companies on purchasing intellectual property. Google and its rivals “look pretty evenly matched at the moment. Google may have become a patent superpower.”

The goal of Google’s new patent clout is also to act as protection for the handset makers that have been bearing the brunt of the litigation, the company said yesterday.

Patent Weaponry
Competition for dominance in the smartphone market has heated up since Google introduced Android in 2008. Patents, which grant exclusive rights to use a specific invention, have become a way to fight for market share and inhibit rivals from introducing new features.

Apple stepped up the patent feud by suing Android manufacturers, claiming Google-powered devices copy the iPhone and iPad. Microsoft has sued Motorola Mobility and Barnes & Noble Inc., whose Nook reader runs Android software.

Apple and Microsoft have focused on the devices that run on Android, while Oracle Corp. (ORCL), which has sued Mountain View, California-based Google directly, contends Android was developed using its Java programming language. Oracle is seeking billions of dollars in damages for patent- and copyright-infringement, and Google’s response has been limited to challenging the validity of Oracle’s patents.

Heightening the dispute, a group led by Apple and Microsoft won an auction of patents owned by Nortel Networks Corp. in June after bidding up the price to $4.5 billion, beating out Google in the largest-ever patent auction.

Google Shops Around
Before agreeing to buy Motorola Mobility, Google had few patents on mobile-phone technology. The company’s research had focused largely on its main search-engine business.

Google, seeking to tilt the balance, has actively sought patents that it said could be used as a deterrent to litigation, culminating in the purchase of Motorola Mobility. Google bought more than 1,000 patents in July from International Business Machines Corp.

“Yesterday you could sue Google and you weren’t taking any risks because they didn’t have any patents,” said Pierre Ferragu, an analyst at Sanford C. Bernstein in London. “Today it’s the same as suing Motorola.”

The purchase of Motorola Mobility lessens the likelihood of future bidding wars, Ferragu said.

“You have very, very few transactions that would make sense today,” he said. “You possibly have some smaller transactions as Google continues to shop around for quality.”

‘Level Playing Ground’
Motorola Mobility traces its roots to the 1928 founding of Galvin Manufacturing Corp. in Chicago. The company, renamed Motorola, was a pioneer of early televisions and two-way radio in World War II. It helped lay the foundation for the mobile- phone industry, demonstrating its first handset in 1973.

“Motorola was a pioneer in this business,” said Will Strauss, an analyst at Tempe, Arizona-based Forward Concepts Co. “They certainly have a lot of intellectual property. It will certainly level the playing ground quite a bit. It’s going to give them an awful lot to defend Android with.”

The purchase would directly embroil Google in litigation, where its partners have until now been the main targets. Motorola Mobility has its own pending lawsuits against Apple and Microsoft. A case Microsoft brought against Motorola Mobility is due to begin trial Aug. 22 at the U.S. International Trade Commission in Washington, and a victory may mean a ban on imports of Motorola phones. Motorola Mobility retaliated with a bid to ban U.S. imports of Microsoft’s Xbox video-game systems, with a trial scheduled for October.

Protecting the Ecosystem
Motorola Mobility’s case against Cupertino, California- based Apple also was scheduled to begin Aug. 22, though it’s been postponed. Apple’s case against Motorola begins in September at the ITC. Samsung and HTC also have each filed separate suits against Apple.

“We believe we’ll be in a very good position to protect the Android ecosystem for all of the partners,” Google Chief Executive Officer Larry Page said in a conference call with analysts yesterday. Motorola will manage the litigation until the acquisition is completed, expected by the end of this year or early next year, he said.

Kevin Kutz, a spokesman for Redmond, Washington-based Microsoft, declined to comment on what Google’s purchase of Motorola Mobility might mean for the litigation. Kristin Huguet, an Apple spokeswoman, also declined to comment.

Nokia Agreement
Apple has been winning so far, with an ITC judge’s finding that, if upheld, could lead to a ban on imports of HTC phones into the U.S. and a court order that prevents Samsung from introducing its new Galaxy Tablet in most of the European Union. As yet, nothing has stopped sales of Motorola’s phones or Xoom tablet.

Google may be hoping that an agreement can be reached with Apple that mirrors one the computer maker struck with another phone pioneer, Nokia Oyj (NOK1V), said Bernstein’s Ferragu.

The Finnish phone maker in June said it won an almost two- year patent dispute with Apple in a settlement that provided it with a one-time payment plus royalties.

“From that, you could infer that in the end it’s going to be Apple paying Motorola, paying Google,” Ferragu said.

While there will continue to be patent purchases in the mobile-phone market, litigation may slow if Google is successful in its strategy of using patents as leverage to strike settlements and keep further lawsuits at bay.

“It may not be the end, but you can see it from here,” said Inflexion Point Strategy’s Laurie. Google “was such an obvious target, and now they’re not,” he said.

bloomberg.com

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From: Dexter Lives On8/16/2011 8:53:59 AM
   of 16774
 
In the World of Wireless, It’s All About Patents
By MICHAEL J. DE LA MERCED
August 15, 2011, 9:11 pm
Mergers & Acquisitions

Google, in announcing a $12.5 billion deal for Motorola Mobility on Monday, saved its warmest words not for Motorola Mobility’s management or its products, but for one valuable asset: the company’s roughly 17,000 patents, as well as an additional 7,500 patents that are under government review.

That intellectual property portfolio is a treasure trove for Google because the battle in wireless is one that is increasingly being fought in court.

Corporate warfare over patents is not new. Companies historically preferred to reach truces, choosing to cross-license their intellectual property rather than risking bigger losses in court.

But patent battles are no longer waged between just two competitors, like Intel and Advanced Micro Devices. Platforms like Android and Windows Phone 7 are built upon a handful of device makers, adding more players with different stakes at risk.

That has changed the calculus of settling, as product makers have become increasingly willing to sue rather than reach peaceful settlements.

“Now you’re seeing more suits being brought by product companies willing to step up and say we will defend our patents,” said Colleen Chien, an assistant professor at the Santa Clara University School of Law.

Apple has sued important Android phone makers like HTC and Samsung, while Oracle has taken Google to court. The fighting has been likened to a “patent arms race.”

“The best way to fight a big portfolio of patents is to have your own big portfolio of patents,” said Herbert Hovenkamp, a law professor at the University of Iowa. “That appears to be what Google is doing here, arming itself with patents to be able to defend itself in this fast-growing market.”

Large sums hang in the balance, especially if phone makers are forced to pay out royalties for each handset they make. Microsoft has already persuaded HTC to pay a fee for every Android phone manufactured, and is seeking to extract similar royalties from Samsung.

If left unchecked, such payments could make creating new devices for Android prohibitively expensive for manufacturers, forcing them to turn to alternative platforms like Windows Phone 7.

“With a slim patent portfolio, Google is especially vulnerable to lawsuits against its Android licensees, if not itself,” Charlie Wolf, an analyst with Needham, wrote.

By acquiring Motorola Mobility, Google is seeking to ensure that growth in the Android market will not be choked by the burden of royalties.

The importance of bulging patent portfolios became clear this summer after a consortium led by Apple, Microsoft and Research in Motion, the maker of the BlackBerry, paid $4.5 billion for some 6,000 patents held by Nortel Networks, the Canadian telecommunications maker that filed for bankruptcy.

Google, which initially offered $900 million for the collection, fell short after several bids. Shortly afterward, Google executives complained that the company’s rivals had banded together to smother its Android system with patents.

“We’re determined to preserve Android as a competitive choice for consumers, by stopping those who are trying to strangle it,” David Drummond, Google’s chief legal officer, wrote in a blog post earlier this month.

In a sign of how badly it appeared to want Motorola Mobility’s patents, Google offered $40 a share, a rich 63 percent premium to Motorola’s closing price on Friday. Analysts at Jefferies calculated that, of the $12.5 billion offer price, Google was essentially paying $9.5 billion for the patents.

And analysts at Canaccord Genuity estimated that the price per patent was higher than the $4.5 billion total that bidders paid for the Nortel patents.

Though companies like Google may be snapping up thousands of patents at a time, they are looking for the few that cover their competitors’ products. Among the most valuable components of the Motorola collection, according to analysts, are those that cover cellular radio technologies like 4G data speeds.

It was the high price fetched by Nortel’s patents that opened the eyes of Motorola’s directors, people briefed on the matter said.

Continued at:

dealbook.nytimes.com

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To: Dexter Lives On who wrote (15971)8/17/2011 10:33:16 PM
From: Mark Bartlett
   of 16774
 
Let the games begin!


WiLAN Announces Intention to Make an All-Cash Takeover Offer for MOSAID Technologies and C$200 Million Extendible Convertible Debenture Offering

tmx.quotemedia.com

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To: Mark Bartlett who wrote (15972)8/18/2011 8:33:01 AM
From: Dexter Lives On
   of 16774
 
MOSAID Responds to Announcement of Unsolicited Wi-LAN Offer

Press Release Source: MOSAID Technologies Inc.
Thursday August 18, 2011, 8:15 am

OTTAWA, ONTARIO--(Marketwire - Aug. 18, 2011) - MOSAID Technologies Inc. (TSX: MSD - News) announced that it learned late yesterday of Wi-LAN Inc.'s intention to make an unsolicited all-cash offer for the Company. MOSAID's Board of Directors is considering and evaluating Wi-LAN's offer and will respond in due course.

MOSAID's Board of Directors recommends that shareholders take no action until shareholders have received further communications from MOSAID's Board of Directors.

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To: Dexter Lives On who wrote (15973)8/20/2011 10:19:14 AM
From: Dexter Lives On
   of 16774
 
Mosaid shareholders want to taste sweeter WiLan bid

Major investor in both firms likes deal, expects C$45/shr

* Investors holding half of Mosaid say need more - analyst

* Mosaid shares sticking slightly above bid offer (In U.S. dollars unless noted)

By Alastair Sharp

TORONTO, Aug 19 (Reuters) - WiLan ( WIN.TO) will have to sweeten its C$38 a share cash offer for fellow Canadian patent company Mosaid ( MSD.TO) if shareholders are to accept the deal, investors and analysts say.

WiLan made its unsolicited C$480 million ($485 million) bid for Mosaid on Wednesday, underscoring a growing race among tech companies to capture wider patent portfolios.

Just days earlier Google ( GOOG.O) said it would pay $12.5 billion for Motorola Mobility ( MMI.N), while Apple ( AAPL.O), Microsoft ( MSFT.O) and others paid $4.5 billion for patents belonging to bankrupt Nortel Networks ( NRTLQ.PK) last month.

"The C$38 bid is a starting point ... something closer to C$45 would be more in line," Peter Imhoff, a portfolio manager at Sprott Asset Management, told Reuters.

Sprott is Mosaid's third-largest investor and the second-largest WiLan shareholder, according to Reuters data.

Others echoed the view that WiLan will have to sweeten the offer price.

"The combination makes absolutely rational sense ... (but) they need to up their game a bit," said Sameet Kanade, an analyst at Northern Securities with a "buy" call on Mosaid.

Kanade said he had spoken to Mosaid investors holding more than 50 percent of the company's shares and they said the bid on the table is not enough.

"It was a unanimous call that WiLan should be looking more towards the high-40s if they want this thing to go through," he said. "Some of them even said unless it's in the 50s range they won't entertain the call."

WiLan wants to buy Mosaid for its 2,800 patents, creating a Canadian patent powerhouse able to negotiate lucrative terms with technology giants that use the inventions in products ranging from wireless to semiconductors.

They're not alone in eyeing more patents, and could expect attention from rival licensing firms for Mosaid's technology.

Potential candidates named by industry sources include InterDigital ( IDCC.O), a $3 billion company that recently put itself up for sale.

Companies that warehouse patents to protect their member companies could also be in the running, including privately held Intellectual Ventures and RPX ( RPXC.O), a $1.14 billion firm out of San Francisco.

WiLan is not blind to the threat. Its chief executive told Reuters on Thursday he couldn't predict who might come knocking on Mosaid's door. [ID:nN1E77H09C]

HIGHER OFFER

Mosaid is undoubtedly seeking the advice of investment bankers and looking to evaluate how much it is worth to outside bidders, especially given the premiums paid in Google's Motorola bid and Nortel's $4.5 billion sale, a price that surprised many patent industry analysts.

Google's move is widely seen as an attempt to buy patent insurance against increasingly aggressive legal attacks on its Android mobile software from rivals such as Apple, Microsoft and Oracle.

Mosaid gets much of its revenue from licensing deals for memory and semiconductor technology and says anyone using Wi-Fi needs one of its licenses, and likely expects the rush of interest in patents will entice other offers.

BMO Capital Markets analyst Brian Piccioni raised his price target on Mosaid to C$40 from C$32, based on the WiLan bid and on the potential for another bidder emerging.

"Could we afford to up the offer? Yes," WiLan Chief Executive Jim Skippen told Reuters. "Would we up the offer? That's a board decision ... but we would consider it."

Northern's Kanade says WiLan couldn't stretch much above C$47 without taking on more debt or adding shares to the mix.

In the end, it will come down to how potential buyers value Mosaid's patents, which may not entice big guns in the same way those held by veteran developers like Nortel and Motorola did.

"This potential combination between WiLan and Mosaid is about monetizing the patent portfolio. It's a different play altogether as opposed to Google buying Motorola or the Nortel auction," Kanade said.

Still, the portfolio could become more valuable quickly since Mosaid is fighting seven patent infringement cases that could extract licensing deals from companies including chipmakers Intel ( INTC.O) and Marvell ( MRVL.O), and settlement of half these cases could boost Mosaid's top line by half.

Mosaid's shares traded around C$39 on Friday, implying shareholders were confident a higher bid would emerge.

Sprott's Imhoff was also looking further ahead.

"I think everybody that has held this story for quite a while understands what the value is and that this is an initial bid," he said.

Investors will be waiting for news from Mosaid when its board meets on Aug. 24. The company reports quarterly earnings after the markets close on August 25.

($1=$0.99 Canadian) (Additional reporting by Pav Jordan and Trish Nixon; editing by Rob Wilson)

reuters.com

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To: Mark Bartlett who wrote (15972)8/20/2011 10:30:57 AM
From: Dexter Lives On
   of 16774
 
I think they should up it to $45, make it 25% shares 75% cash, and make it clear that is the deal - no more increases coming....

Keep the financing, which will bring some nice tax benefits when WiLAN's income starts drawing taxes, and use the excess cash to make more patent portfolio acquisitions.

l'll be offline for the next few weeks; hold the fort!

Cheers.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Why tech giants are spending billions on patents

omar el akkad — TECHNOLOGY REPORTER
From Saturday's Globe and Mail
Published Friday, Aug. 19, 2011 7:20PM EDT
Last updated Friday, Aug. 19, 2011 7:37PM EDT

When 2011 comes to a close, it’s a good bet that at least three of the biggest deals in the technology sector this year will have involved the transfer of patents.

Last month, a consortium led by Apple ( AAPL-Q356.03-10.02-2.74%), Microsoft ( MSFT-Q24.05-0.62-2.51%) and Research In Motion ( RIM-T26.430.943.69%) bid a whopping $4.5-billion (U.S.) for 6,000 Nortel patents. This week, Google ( GOOG-Q490.92-13.96-2.77%) offered $12.5-billion for Motorola Mobility ( MMI-N37.860.010.03%), acquiring its war chest of 17,000 patents. Also this week, Canadian patent licensing firm Wi-LAN ( WIN-T6.45-0.22-3.30%) made a $480-million (Canadian) offer for another Canadian patent company, Mosaid ( MSD-T39.22----%).




To understand why the biggest technology companies are suddenly spending billions of dollars on patent portfolios, consider the case of Lodsys.

Little-known outside legal and technology circles, the Texas-based firm tries to generate revenue by enforcing four patents it own that relate to online interactions and payment methods. Like other patent firms, it has sued some of the largest tech companies in the world, including HP and Motorola.

However, Lodsys went a step further. Earlier this year, it began demanding settlements not just from big firms, but from individual (and often relatively tiny) app development shops. The move sent shock waves through an industry worried that the growing litigation would cripple the fastest-growing sector of the technology market – consumer mobile products such as smart phones and tablets. In this market, a single patent can apply to dozens of different (and lucrative) devices.

Apple and Google both stepped into the legal fray to fight back. Today, the Lodsys courtroom saga has sprawled into dozens of cases against at least 33 defendants ranging from Samsung to Best Buy, Adidas to the New York Times Company.

And that’s only one example. What was once a cold war, with companies stocking up on patents but rarely enforcing them, has turned hot. Not only are patent-licensing firms looking to cash in on their portfolios, but big companies such as Apple and HTC are involved in myriad patent cases around the globe.

“The thing that is a bit different is we have a sort of unprecedented patent war between many of the handset companies,” says Jim Skippen, chief executive officer of Wi-LAN. “That is something new, and it’s getting a lot of airplay.”

Patents have suddenly become the No. 1 issue for myriad large tech companies for two reasons: A host of patent firms such as Wi-LAN have become more aggressive – and, in many cases, successful – in pushing for licensing deals from companies they believe are using their patents.

But perhaps more importantly, major players in the tech space are increasingly using patents as a tool to fight competitors. This summer, Apple managed – albeit temporarily – to convince a German court to ban new shipments of Samsung’s Galaxy tablet computer throughout most of Europe. The court order showed just how disruptive a patent dispute loss could be for companies.

The threat of being banned from entire marketplaces is in large part why big companies have been so inclined to fight or try to settle patent disputes. Indeed, a major reason RIM paid Virginia-based patent firm NTP Inc. $612.5-million to settle a court case in 2006 was the potential consequence of a court-ordered injunction against BlackBerrys in the U.S.

Because of its size and its role as the epicentre of the industry, the U.S. is the most important jurisdiction for technology patent disputes. But given that cases can take years, and millions of dollars, to resolve, small-time inventors or businesses find it difficult to defend their patents.

Additionally, judges and juries in technology patent cases are often not technically inclined. “It’s not trivial to understand what a patent covers,” says Florian Mueller, a prominent patent expert and blogger. “The closest thing to a patent expert on the jury might be a grade-school teacher, but that jury will determine if a patent is valid and how much you’ll have to pay.”

The difficulties begin well before any parties see the inside of a courtroom. The first hurdle is simply identifying if, and by whom, a patent has been infringed. Whereas pharmaceutical industry patents, for instance, tend to use consistent and easy-to-search terminology, technology patent keywords can be as vague as “object” or “network.” And while a pharmaceutical product may potentially infringe on one or two existing patents, a single piece of hardware or software could infringe on hundreds.

“It’s complicated because the question in many of these cases is whether this patent that was issued 10 years ago, and it may have been a valid patent ... applies to an app on an iPhone today,” said Edward Naughton, a lawyer representing several app developers who recently received licensing demands from Lodsys.

The U.S. patent industry was on the verge of cataclysmic change earlier this year, thanks to a case that Canadian software firm i4i filed against Microsoft. The case alleged that a piece of code in Microsoft’s Word product infringed on i4i technology.

Microsoft took the case all the way to the U.S. Supreme Court, losing every decision along the way. Microsoft argued before the top court that it should be easier to have a patent declared invalid – something that would have had profound impact on the entire technology industry, had the Supreme Court not shot it down.

The software giant argued that the high standard required for invalidating a patent would stifle innovation, i4i argued that weakening that standard would do the exact same thing. In legal filings, many large technology companies sided with Microsoft, while many venture capital firms – which invest predominantly in small technology start-ups – sided with i4i.

Even though the Supreme Court decided to maintain the status quo, the argument over patent reform has become increasingly more high-profile (thanks in large part to frequent criticism of the current system by Google, a company that holds far fewer patents than many of its competitors). U.S. Congress has stepped into the fray, considering possible options for improving the system.

But unless there’s a major change in the system, it is likely the world’s biggest technology companies will continue to write billion-dollar cheques in order to stock up on as many patents as they can, if only to avoid the massive ongoing court costs. According to a recent prospectus filed by patent company RPX Corp., there were some 40,000 defendants named in U.S. patent infringement cases between 2005 and 2010, with total litigation costs in the tens of billions of dollars.

“That’s a big debate that’s under way in the legal and tech communities [as to how to fix the patent system],” says Mr. Naughton. “And it’s not an easy question.”

theglobeandmail.com

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To: Dexter Lives On who wrote (15975)8/21/2011 11:13:18 AM
From: Dexter Lives On
   of 16774
 
I would add that if the preference is for an all-cash deal, go no higher than $40.

Then let those Mosaid investors that want to continued sector exposure buy WiLAN shares on the open market....

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To: Dexter Lives On who wrote (15976)8/21/2011 9:49:47 PM
From: Mark Bartlett
   of 16774
 
Zen,

Maybe keep the cash the same and offer 1 warrant/Mosaid share, exercisable at 12 bucks, good for 18 months for the new Wi Lan shares. That way it will limit the dilution and provide a decent incentive to get the deal done. I have to believe that 18 months out from now the new Wi Lan is trading much higher than 12 bucks/share.

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To: Mark Bartlett who wrote (15977)8/21/2011 11:53:10 PM
From: Dexter Lives On
   of 16774
 
Great suggestion!

Talk to you next month....

Cheers.

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To: Mark Bartlett who wrote (15977)8/26/2011 9:40:26 AM
From: Dexter Lives On
   of 16774
 
Based on Mosaid's quarterly results and barring another bidder, it looks like the deal might get done at $38.

It's a long way down from here for MSD if WiLAN pulls its bid....

Expect the market to start pricing the stocks accordingly - MSD trades down to around $38 and WIN up to $X ?

Cheers.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Mosaid profit cut nearly in half

Sunny Freeman, LuAnn LaSalle The Canadian Press
Published Thursday, Aug. 25, 2011 4:42PM EDT Last updated Thursday, Aug. 25, 2011 7:24PM EDT

Mosaid Technologies Inc. ( MSD-T40.20----%) reported Thursday net profits that were cut nearly in half in the latest quarter, but its CEO expects boom times ahead as interest in patent portfolios takes off.

“Many companies are now studying how to unlock the value of their patent portfolios,” said John Lindgren, president and chief executive of the Ottawa-based patent licensing firm.

“And companies such as Mosaid are attracting a new level of investor interest.”

The company has also caught the idea of rival patent licensing firm Wi-LAN Inc. ( WIN-T6.73----%), which has offered $480-million for Mosaid – a price many consider too low in the current patent market.

In a call with analysts, Mr. Lindgren cited the $4.5-billion auction of 6,000 Nortel patents in early June, which fetched a per patent price of $750,000, for sparking a “re-evaluation of patents as an asset class.”

The 63 per cent premium that Google Inc. recently paid for Motorola Mobility – a holder of 17,000 patents – is another example of how the market is treating patents as a more valuable investment than they were just months ago, he added.

In its first quarter financial report, Mosaid saw its profit fall to $2.6-million down from $5.1-million a year ago as it faced higher expenses – nearly $8.7-million from $6.1-million – as patent licensing and litigation costs increased sharply.

Revenue for the three months ended July 31 was down slightly to $18.3-million from $18.5-million, the company reported.

Earnings per share were also cut in half to 21 cents from 43 cents. However, earnings on an adjusted basis were $7.2-million, or 59 cents per share, lower than the previous year but well above analyst expectations of 45 cents per share.

Despite the lower earnings, Mr. Lindgren told analysts that he intended to give them a fresh appreciation for the company’s value and potential, while he also reiterated his disapproval of the hostile bid from Wi-LAN for being too low.

Ottawa-based Wi-Lan has offered $38 a share in cash for Mosaid, a company in which it already owns 1.6 per cent of the stock.

“The special committee and its advisers are actively engaged in evaluating Wi-LAN’s offer and the board will respond in due course,” he told analysts.

“That said – I can tell you that the special committee’s preliminary view is that the timing and approach of Wi-LAN’s offer are highly opportunistic and that Wi-LAN’s offer clearly undervalues Mosaid.”

Mosaid’s board of directors said earlier Thursday it will make a recommendation on Wi-LAN’s hostile takeover offer by Sept. 7. Mr. Lindgren repeated Mosaid’s plea to shareholders to take no action until after the board has responded formally.

Meanwhile, the company will step up its plan to expand its patent licensing programs with a goal to grow compound annual revenue by more than 20 per cent, partly by more aggressively investigating in litigation to enforce patent rights.

For its financial results, Mosaid said it had a “solid” first quarter to begin its fiscal 2012.

“We were particularly active in the courts, moving to assert our intellectual property rights by initiating patent infringement suits in the areas of semiconductor memory, power over ethernet technology, wireless communications, and cloud computing,” Mr. Lindgren said.

Mosaid has about 2,800 patents covering computer chips as well as short-range wireless technology used in mobile phones, tablets and laptops, while Wi-LAN has more than 1,400 patents covering wireless technologies including short-range Wi-Fi networks.

Wi-LAN also has patents covering V-chip technology, which allows parents to block television content they believe is inappropriate.

The two companies generate most of their revenue by licensing technology rights to large telecom and computer chip makers, which have recently demonstrated that they’re willing to pay hundreds of millions or even billions for patents.

Mosaid’s large institutional shareholders have said Wi-LAN’s offer is too low and expect it to go up at least $5, anywhere from $42 to $48 per share.

Northern Securities analyst Sameet Kanade has increased his target share price to $45, while BMO Capital Markets analyst Brian Piccioni has raised his target price to $40 from $32 based on Wi-LAN’s bid and the possibility of a raised price or potential “white knight.”

Mosaid has hired Barclays Capital Canada Inc. and GMP Securities as financial advisers and Davies Ward Phillips & Vineberg as legal adviser for Wi-LAN’s unsolicited bid.

http://www.theglobeandmail.com/globe-investor/mosaid-profit-cut-nearly-in-half/article2142182/

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