|This person thinks RIMM patents are worth 2.5B... Throw in their cash and data biz and perhaps we are not too far from the point where the phone biz is valued at zero...|
Research In Motion Patents Worth Just $2.5B, Analyst Says
If you were counting on the value of the patent portfolio at Research In Motion to bail you out of losses in the stock, maybe you should think again.
Jefferies analyst Peter Misek has taken a deep dive into the smartphone patent mess, in particular sorting through the patent situation in LTE, in an attempt to figure out who controls the most important intellectual property in the sector. Misek notes in a new report that there are three key areas where patents are concentrated: hardware, software and wireless technology. “Due to the death of companies with substantial patent portfolios in all three areas, we conclude that the patents wars are far from over,” he writes, adding that his findings support his bullish case for Apple and a cautious stance on RIMM.
Here are some of his key conclusions:
Misek goes on to estimate which companies have important LTE patents, and guesses at what those holdings might be worth. He defined an essential LTE patent as one that “related directly to technology that is strictly required to meet the technical specifications of the LTE standards.”
- Misek notes that Apple has patent strength in hardware and software, but “could be stronger in wireless.” He notes that company’s role in the group – Apple, EMC, Ericsson, Microsoft, RIMM and Sony were all involved – that recently acquired Nortel’s patent portfolio for $4.5 billion improved its position, but that it still trails many of its rivals in that area. He contends that Apple could improve its position in LTE patents significantly by acquiring Interdigital, a wireless IP company that is actively seeking bids. Misek thinks Apple and Microsoft are the most likely buyers.
- He says that RIMM’s patent portfolio has a liquidation value of only $2.5 billion – and that the company has very few important patents covering LTE technologies.
- He estimates that of the $12.5 billion Google is paying for Motorola Mobility, the company’s patents alone are worth $5 billion to $7 billion. He estimates that the set-top box business is worth $1.5 billion, with the Motorola handset business worth $1 billion to $3 billion. (Motorola also has $3 billion in cash.)
Here’s what he came up with:
- The Nortel portfolio, he estimates, includes 4% of the “essential LTE patents,” with a value of $1.35 billion.
- LG, he says, has 23% of the key patents, worth $7.9 billion.
- Qualcomm, 21%, $7.3 billion.
- Motorola Mobility, 9%, $3.3 billion.
- Interdigital, 9%, $3.3 billion.
- Nokia, 9%, $3.1 billion.
- Samsung 9%, $3.1 billion.
- ZTE 6%, $2.1 billion.
- Ericsson 2%, $600 million.
- Research In Motion 1%, $400 million.
- Huawei 1%, $200 million.
- Freescale, 1%, $200 million.
- NEC, 1%, $200 million.