This week I helped Bloomberg News understand some of the BlackBerry dynamics a bit better. Unfortunately, BBRY is down about 2% since this went out, but it was important for investors to understand 1) that the extent to which BlackBerry's patent portfolio is licensed is key to generating a transaction value, 2) the portfolio is both large and young and 3) Apple has been citing this portfolio at a significant rate. A few high points from the story:
"(V)alue may be lower if BlackBerry has already licensed much of its technology, said Erin-Michael Gill, managing director of MDB Capital. Widely licensed patents have less use for new deals or court challenges.
“If that’s the case, the financial buyers no longer have much interest -- and the strategics don’t need them,” Gill said. “Then it would go from multibillion dollars to a trivial amount, probably just a few hundred (million).”
Patents last 20 years from the date of their application, making BlackBerry’s 3.4-year average appealing, Gill said.
“There’s 15-plus years of useful life to this portfolio, which is significant,” he said. “Anybody that cares about Apple is going to care about this portfolio -- including Apple.”
Since similar portfolios generate more than $1 billion a year, BlackBerry should be able to average at least $100 million in licensing revenue annually, Gill said.
“Even if strategic buyers like Apple, Google or Samsung don’t have the same enthusiasm that they might have had two years ago, the floor value a financial buyer would put on the assets means it’s still going to go for a meaningful amount,” he said.
They ended up turning the analysis into a short "Global Outlook," segment with Bloomberg's Mia Saini on Bloomberg Television's "On The Move Asia." (Source: Bloomberg)
My firm, MDB Capital, is a sponsor of the Department of Energy's ARPA-E Energy Innovation Summit in Washington DC. Earlier this year I was asked to speak on a panel with a few experts about IP issues and strategy. Also presenting:
Dr. Robert D. Atkinson, President, Information Technology and Innovation Foundation,
Sarah Harris, Senior Vice President and Deputy General Counsel, Intellectual Property, AOL,
Brian P. O’Shaughnessy, Shareholder, RatnerPrestia
Dr. David Parekh, Vice President, Research and Director, United Technologies Research Center
A bit basic for some, but might still be interesting if you have the time.
