Tag Archives: Alcatel-Lucent

Liquidation Value of Alcatel IP Rights is said to be $3.9B to $5.9B

Bernstein Research and WSJ say that the company’s patent value is up to three times greater than its current market cap

A credible news source is reporting that the liquidation value of the patent portfolio and other IP rights of beleaguered telecommunication equipment company, Alcatel-Lucent (NYSE: ALU), is worth as much as $6B.

Alcatel-Lucent, which current is trading at $1.12 per share at the close on Friday, has about 28,000 patents, many the best of which according to IP CloseUp sources have already been licensed. Back in February it also tried to license patents through defensive patent aggregator RPX (NASDAQ: RPXC).

alcatel-lucentAccording to a chart that appeared in the Wall Street Journal on December 7 attributed to FactSet and Bernstein Research , the intellectual property liquidation value of Paris-based Alcatel-Lucent is 3B to 4.5B euros or, at $.131 USD per euro, about $3.9B to $5.9B USD. It is not clear if this figure includes equity associated with the Alcatel-Lucent brand or trade secrets.

Alcatel-Lucent still hold some patents based on research conducted at famed AT&T Bell Labs. Lucent was established in 1996 and sold to Alcatel in 2006.

According to patent valuation experts the estimated value of the ALU IP rights could be even further afield than the $2.4B-$2.6B estimate for bankrupt Kodak’s patents. (It was announced last week that the Kodak portfolio is about to be sold for $500M to a “consortium of bidders” as part of a refinancing deal by a group led by JP Morgan Chase and UBS.) The heavily encumbered and much shopped Kodak portfolio could not generate auction bids of much higher than $150M.

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Inflated values for patents of public companies in search of a higher stock price help no one.

Do analysts and the media really believe they can throw around valuation numbers without consequence or support? The sale of Nortel’s uniquely overpriced portfolio for $4.5B in 2011 to a group led by Apple, Microsoft, Ericsson, Sony and RIM was an anomoly. It has skewed expectations about the real world value of patents.

For analysts to suggest that patent may be worth several or more times than they can reasonably generate is arguably irresponsible and a disservice to shareholders and innovators alike.

It could hurt more than help these companies and their investors in the long run, as attempts are made to establish more accurate prices and efficient markets for intangible assets worldwide.

Illustration source: mobile-web.me

Disclosure: Neither Brody Berman Associates nor Bruce Berman owns shares of Alcatel-Lucent or holds a position, long or short.

Mobility Patents Now Comprise 21% of all U.S. Grants

Report Details Surprising Shift in IP Haves and Have-Nots

In the first quarter of 2012 better than one in five patents granted in the U.S. were related to mobile communications. This is up from just 5% in 2001.

Not only has the filing pace picked up, but according to a report written by a wireless industry consultant who analyzed some 7 million patents granted by the USPTO and the EPO since 1993, it has provided some players with a surprising arsenal and others with holes that need to be filled. The research, Mobile Patents Landscape: An In-Depth Analysis, examines the evolution of IP filings and grants in the mobile industries, and who are the apparent winners and losers. (It is available by clicking on the highlighted title.)

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One of analyst Chetan Sharma’s centerpiece graphs (shown on the left side of this page), Mobile Related Patents Issued, 1993-2011, breaks out USPTO and EPO grants. Samsung, Nokia, Alcatel-Lucent and IBM are the top four.

Nokia, which recently announced 10,000 layoffs and whose credit has been has been downgraded to non-investment grade, looks to be in a good position to get top dollar (or Euro) for selling a portion of its patents, should it choose to.

Alcatel-Lucent is the European leader, while IBM, surprisingly, is the U.S. leader in mobile communications by far with about 9,500 patents. Apple is shown to have barely 1,000 mobility-related patents and perhaps only 100 in Europe.

Mobile Patents Landscape makes for fascinating reading for anyone interested in mobile communications patents and holders.

Illustration source: iClarified.com

Alactel-RPX Patent Licensing Venture is Short on Details

Deal is Said to Worth as Much as 1B Euros

When Alcatel-Lucent announced recently that Rational Patent Exchange (RPX), the defensive patent aggregator, would be presenting its 29,000 patents for license to RPX’s some 50 blue chip clients, it received notable attention. What was not detailed is how the revenues will be generated and sustained.

IP CloseUp has learned that the licenses being offered may, in fact, be short-term agreements that must  to be renegotiated when they expire in a year or so. That would mean that, depending on any encumbrances for currently licensed patents, the value to AL may be spread out over time. It also may mean that RPX members not covered by AL patents may find themselves scurrying for patent protection at various times in the future.

Alcatel-Lucent (ALUA.PA) announced it had signed a deal with patent licensing specialist RPX Corp (RPXC.O) that would allow it to generate substantial new revenue from its portfolio of 29,000 patents on everything from fixed and mobile communications to semiconductors and consumer electronics.

Under the agreement, RPX will market Alcatel-Lucent’s patents to its members, which include companies like Google and Intel. By next summer, RPX will present Alcatel-Lucent with the option to sign licensing deals with the individual companies. It is not clear how RPX will be compensated.

Bloomberg BusinessWeek said that “Alcatel-Lucent could generate 500 million euros to 1 billion euros in revenue in 2012 from the patents, according to four analysts.”

Reuters added that “Alcatel-Lucent did not specify how much money it thought it could make from the deals, but Oddo Securities estimated that it could be 1 billion euros in 2012.” 

IAM coverage  hailed it as breaking new ground, and reported that RPX’s stock price was up more than 10%. (AL’s was up about 17% over the five-day period following the announcement.)

An IP transaction expert that IP CloseUp spoke with suggested that AL-RPX will likely generate significant licensing income the first quarter or two, but the billion euro figure will be difficult to attain without almost universal participation of RPX’s membership. Partial or short term licenses could be a launching pad for future litigation.

Alcatel-Lucent CEO Ben Verwaayen said the February 10 investor conference call that coincided with the patent licensing announcement:

“Let me spend 2 minutes to clarify why this is an innovative approach and why I think it’s very important. It’s important because the first thing we are not doing is sell our portfolio. That’s not what we’re doing. It’s important to understand that. We have a position in the telecom market for which it is very important that we have the strongest portfolio in patents in the industry, and we will maintain to have that. 29,000 patents that we have is not just an illustration of a strong past. It is, at the same token, a great basis for a great future. That is not at all at stake.

“But also in that particular market of patents, innovation takes place, and innovation takes place because people think about value very differently than they may have done in the past. So when we are working together with RPX, we discovered that the ability they have to do syndicate licensing, where basically, you’re part of a club, you pay for the usage of it, but you don’t own it because we own it, but you have the same protection as if you would buy it, is a very innovative new way of looking to a patent. And it gives us reach far beyond the classical reach that we would normally have because we don’t run a patent syndicate.

“We don’t run the capabilities in-house to go out and reach out of our industry to other industries for some of the patent reach, but they do. And they have a capability that we find extraordinarily interesting, extraordinarily interesting for 2 reasons. First of all, as Paul will everybody — remind every single time, this is time-limited. This is not forever, so the opportunity to go do something is relatively short-term. Second, we have the capability, if necessary, we are not satisfied, to walk away. And third, it is nonexclusive, so it allows us to do what we’d normally do. It gives us choice, and it gives us an impact that we think is substantial.

“And I think innovation in many different ways of an organization is a sign of strength. So some of the comments I read this morning are really, I think, not really — are really not on the mark. This is about not selling the family silver. This is about getting a creative capability to leverage the assets that you have. And that is what enterprise is all about.”

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There are many unanswered questions here. Most importantly, what if RPX clients elect not to take a license? Can they expect to be sued?

Will all RPX members be offered the same licensing deal? Will royalty rates vary by industry? Will those who pay more have the right to shape the agreements that other members participate in? Could the AL-RPX deal serve as a catalyst for patent infringement suits? Will they force some members out of the exchange?

While I personally hope this arrangement succeeds it will not be easy. I have to believe that before the announcement at least a few licensees had been lined up, so the first few deals may not be an accurate indication of future ones. The potential for RPX members competing against each other for favorable terms has to be a concern.

Another IP analyst was even less sanguine about the agreement:

Things are rarely what they appear to be, said he. Alcatel may be granting RPX members a short-term license though a favorable collective bargaining agreement via RPX. Think of it as a special offer “group” discount. But thereafter, they will need to renew directly with AL. It’s actually a very clever marketing tool by AL to encourage members to follow-up with a full and commercial rate license. For RPX, it’s a good PR maneuver and a nice twist on their model that will generate some revenue. How much is unclear.

I’m sensing that there is more of this story to unfold. Will AL, RPX and the operating companies that rely on RPX for protection produce the necessary licenses to keep everyone happy and out of court? Time will tell.

Illustration sources: mobilenewscwp.co.uk; dailyfinance.com

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