Recognition of Patent Value Results in Big Shareholder Win –
In developments discussed recently in IP CloseUp, activist IP investor Carl Icahn has made a truly historic impact on the wireless and intellectual property industries with the sale of Motorola Mobility to Google for $12.5 billion.
A couple of weeks ago in an SEC filing Icahn put pressure on Motorola Mobility management, demanding it explore the sale of patents in the wake of the Nortel’s $4.5 billion auction. This move resulted in yesterday’s announcement.
His 26.8 million shares are now worth over $1 billion, up from $655.8 million on Friday. They were worth less than $500 million when Icahn filed an amended 13D on July 20 to suggest that management explore patent sale options. Icahn also urged Motorola two years ago to split into the company into two entities, the Droid-owning Mobility (MMI) and Motorola Solutions (MSI).
It appears that patent-hungry Google has come away a winner, with more than 17,000 focused patents and about 4,000 applications. It also has acquired a business that appears to be in the turnaround mode, reporting strong profits. Shares of InterDigital, whose patents had been sought by Google, dropped just under 20% on Monday. InterDigital will likely continue to be pursued by other smartphone providers, probably at a lower valuation.
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Yet to be answered: What will the deal mean to Google’s Android users like HTC, Samsung, Kyocera and LG?
With Motorola, Google be competing more directly with them in smartphones. Might its OEM partners choose to seek an operating system like Microsoft’s Windows Phone 7 or other non-competitive alternatives. Microsoft and Nokia already have agreed to work together.
If so, a Google hardware spin-off may be not-too-far down the road.
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Icahn’s victory is not without its dark side: According to Fortune, “Based on Google’s $40 per share acquisition price, Icahn’s MMI stake currently is valued at around $1.07 billion. His MSI position is at around $1.23 billion. If we add that to the $1 billion in earlier disposals, Icahn has realized or holds around $3.3 billion in Motorola and its successor companies. That’s just 3.5% below Icahn’s original investment — or $120 million — compared to the double-digit percentage losses he previously was facing. For example, he was down more than $700 million when Bloomberg did its math.”
This is not the first time good patents have bailed out investors. It won’t be the last.
Image source: onenewspage.co.uk