Tag Archives: bankruptcy

Mobile & Other Patents will Play a Role in Pantech Bankruptcy Sale

Expect a transaction to yield some clues about which smart phone-related patents are interesting, what they are worth and to whom.

Struggling South Korean handset maker, Pantech, announced this week that it is up for sale. Pantech’s financial troubles could be other technology companies’ gains, especially if they are interested in cracking the lucrative Korean smart phone market.

A Pantech sale for all or parts of the company also will test the volatile market for US cell phone patents many businesses and NPEs still covet.

After filing the equivalent to Chapter 11 bankruptcy  earlier this year patent-rich Pantech, which sells in the US through AT&T, Verizon and others, announced recently that it was for sale.

Envision IP published a report yesterday that provides a snapshot of Pantech’s patent portfolio. While the size of the portfolio is only a fraction of Samsung’s (60,000 total US patents) and LG’s (30,000), the patents it contains, a number covering signal transmission, appear to be similarly valid based on citation analysis.

Pantech currently owns 291 US patents, with 269 utility patents and 22 design patents. Pantech also owns 2,654 foreign patents, with the 2,239 of these being Korean patents, and 211 European patents.

“In terms of reverse and forward citations, the portfolios of all three companies are relatively comparable,” said Maulin Shah of Envision IP. “The citation analysis indicates that Pantech’s patents, on average, are technically as strong as Samsung’s patents from a validity standpoint, based strictly on the reverse citation count.  With regards to how

EnvisionIP-Pantech-US-Patent-Portfolio-e1412174293852

innovative Pantech’s patents are to the mobile device sector, the patents appear slightly less fundamental than both LG and Samsung’s patents, based strictly on the forward citation count.”

Korean network carrier SK Telecom has been considered the front-runner for the bid. Other Korean conglomerates such as Samsung, LG and Hyundai Motor Group have also been mentioned as potential buyers. (In 2013 Samsung acquired a 10% stake in the struggling company.)

No US or European buyers have been named.

“The possibility of a foreign company nabbing Pantech is also very real,” reports CNET. “Earlier in April, an Indian consumer electronics giant, Micromax, had considered buying a sizeable stake in Pantech. Chinese handset makers Huawei, Lenovo and Xiaomi could all benefit from acquiring Pantech, forging entry into the nigh-impenetrable Korean handset market.”

Image source: pantechusa.com; envisionip.com

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.

Kodak Bankruptcy Funding is Contingent on Patent Sale

Report says that funding will hinge on a $500 million deal.

A story from Reuters that appears today in The NY Times online and was originally reported by the Wall Street Journal states that Kodak (EKDKQ: OTC) will receive up to $793 million in loans from bondholders to emerge from bankruptcy if it can sell its much-discussed patents for at least $500 million.

Kodak has been trying to sell its patent portfolio for over a year and held an auction in September that generated tepid response.

WSJ reported that Kodak “remains in talks for a patent sale with potential buyers including Apple Inc and Google Inc.”

After an estimated initial range of $2.4 billion to $2.6 billion dollars, and weak patent auction bidding reported at about $150 million to $250 million, it would be hard to believe that Kodak and its advisers did not already have a buyer or buyers in place for the 1,100 patent portfolio, which over the years generated much revenue but is said to be severely encumbered.

A sale at $500 million would suggest the patents on average are worth $550,000 each.

Illustration sources: printerinkcartridgesblog.com; thedroidguy.com

U.S.-Funded Alternative Energy Patents Fall into Foreign Hands

Solar Subterfuge

By Daniel Scotto, Whitehall Financial Advisors LLC

The value of energy assets has taken a giant leap backward. What used to be simply bricks and mortar has transformed into billions of dollars’ worth of Research and Development that can now be acquired for nominal cost.

U.S. Companies invested vast sums in developing intellectual property and, as such, creating valuable intangible assets which can now be obtained for little or even zero consideration.  Substantial funding, with heavy contributions from the government in the form of loan guarantees, tax credits and political capital, have aided in the advancement of alternative energy assets and companies of all types.

Overlooked and Undervalued IP
These government subsidized commitments often reside on the balance sheet as undervalued tangible and/or intangible assets. This raises the question as to where the dollars from federal assistance programs have gone. The alternative energy industry now is struggling for financial stability, as exemplified by the proliferation of alternative energy company bankruptcies.

The future of alternative fuel technologies in theU.S.is bleak. The vulnerable financial status of manyU.S.alternative energy companies has provided a forum for non-U.S. companies to gain inexpensive access to federally funded proprietary technologies and developments often protected byU.S.patent laws.

The most glaring example of this poaching is in the area of solar power.  The high-profile bankruptcy of Solyndra, in which the government loaned $535 million prior to the company’s filing for a Chapter 7 liquidation brings to light a disturbing new trend – opening the door for other entities to gain intellectual energy advances at discounted prices (see Solyndra Debacle).  Solyndra has parceled up its assets in such a fashion that foreign buyers, notably the Chinese, can forgo the purchase of hard assets and instead focus on intellectual assets, arguably creating more wealth, on face value, for the bankruptcy estate.

A Win-Win for Foreign Bidders 

The U.S.Department of Energy has moved to block the sale of solar panel manufacturing patents to Chinese companies. Yet, Solyndra is a “win-win” for any foreigner seeking specific assets instead of the burden of having to take the traditional bundle of bankruptcy estate assets.  This approach only serves to give away the billions of federal investment in new technologies (see Solyndra Patents).

There is a growing failure rate of alternative energy companies, another example being Evergreen Solar (see Evergreen Patents) a manufacturer of solar panels. Evergreen is also in the process of liquidating (rather than reorganizing), raising again the question of who gets the patent rights and ultimately the patent protection.  Evergreen’s patents as well as other intangible assets have effectively been underwritten by the U.S. Government. Evergreen embarked on a reshuffling of its assets and cost cutting pending its demise. This has only served to reinforce the new “norm”.  Evergreen has already shifted some of its production to China and is expected to remain an ongoing business pending talks with Chinese investors.  Evergreen received a $58 million financial aid package from theU.S. government.

Exporting Innovation – Unintentionally

A clear trend appears to be developing here. It appears that domestic alternative producers cannot find viable domestic markets. Accordingly, the intangible benefits, more specifically patents and other intellectual property developed with the financial aid of Federal and State grants, are being exported to foreign (often unfriendly) countries at a deep discount, as the market for American alternative projects proves to be too costly.

A further example of an alternative energy supplier facing financial distress is Beacon Power Corp., a flywheel-based energy storage solution which has been forced into bankruptcy. On November 18th a Bankruptcy Judge considered limiting the company’s use of $43 million in backing used as part of the Department of Energy’s Aide Program. The value of the patents in a sale is one of the points being argued by Beacon on behalf of the DOE (see Beacon Power Corp).

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Daniel Scotto is the founder and Chief Executive Officer of Whitehall Financial Advisors, which specializes in the economics of the energy and transportation industries.  Mr. Scotto has over 30 years of experience analyzing and advising energy companies, and has been an active participant in the forensic valuation of assets, rate case testimony and as a strategic advisor to both public utilities and alternative energy companies.

Mr. Scotto was ranked the #1 energy and utility analyst by Institutional Investor for an unprecedented 10 years. He has served as Director of Research for BNP Paribas, Bear Stearns, DLJ, L.F. Rothschild and Standard & Poor’sscotto@whitehallfinancial.com.

Image Source: 123rf.com, dclcorp.com

Shareholders are Biggest Loser in Nortel Patent Sale

Where Was Nortel Management Before Bankruptcy Filing?

Significant patent value was not something that Nortel senior management apparently believed it was sitting atop when it filed for bankruptcy reorganization under Canadian and U.S. laws.

Could management have sold, borrowed against or otherwise leveraged the value of its vast patent portfolio and prevented the bankruptcy that will leave shareholders with pennies on the dollar? Continue reading

Sale of Telco Patents May Change Tech Power Balance

Bidding Frenzy Likely for Nortel Rights

Reuters broke a story that bids for the remaining Nortel Networks patents worth up to $1 billion are due within weeks.

Sources close to IP Insider have said that a veritable bidding frenzy among technology companies such as Apple and Google has developed: “They’re selling off the prized LTE/wireless cluster,” said a banker familiar with the negotiations. “Bids are due before December 20th and $300 – $350 MM is expected from this alone.”

“The rare intellectual-property portfolio sale,” writes Reuters’ Alastair Sharp and Nadia Damouni, “is part of bankrupt Nortel’s auction of assets, most of which have already been sold.

“Sources expect the sale to draw wireless telecom newcomers Apple and Google, which want to build up patent war chests as they fight incumbents such as Nokia, which want to protect their patent positions, in the courts.

“‘There has been one round of bidding on those patents, this has been completed,” said one source, who declined to be identified because the process is private. ‘And what Nortel has done is divide the patents up into different lots covering different kinds of technologies.’

“Nortel, which filed for bankruptcy protection in January 2009, holds more than 4,000 patents that analysts say are worth more than $1 billion in total. Two sources with knowledge of the auction process say they have been grouped into six “buckets” of related technologies and that final bids are due within weeks.

“Nortel declined comment, saying the process is confidential.”

Swedish network equipment maker Ericsson bought most of Nortel’s North American wireless operations, which includes its multi-service switch business.

Stay tuned for further updates.

Illustration source: life.com

Patent Portfolio Sale

Nortel Wireless Sale: Unprecedented

Interesting story today in TelecomTV by Peggy Albright about bankrupt Nortel’s disposition of IP assets.

“Even the process Nortel is going through to determine the disposition of its IP assets is unusual. Normally a company’s executive leadership has the ultimate authority over what to do with its IP. And normally a company would conduct its licensing negotiations with the utmost secrecy.

But in this case, Nortel does not have autonomy to make unilateral decisions and the process is being played out in the public domain through the courts. “Right now, Nortel’s advisers are going through their patents one by one to determine the portfolio’s value. That process should be completed this spring.”

It’s unprecedented for a wireless patent portfolio of this size (several thousand patents) and reputed quality to come to market. It will be interesting to see how much cash it generates for creditors.


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