Consensus analyst value is $8.30....
posted on
Jan 16, 2013 09:42AM
Intellectual Licenses for Electronics & Communications
OTTAWA — Wi-LAN Inc., the Ottawa patent enforcement company, is working hard to get the attention of giant Apple Inc. with fresh lawsuits.
But the intellectual property industry is taking unexpected turns. They could have a big impact on Wi-LAN’s hopes to warm up tepid results and double revenues to $200 million in 2016.
It filed new suits in Florida and Texas last week, alleging that Apple, HTC and Sierra Wireless are infringing on two Wi-LAN patents on advanced wireless technology.
This is far from Wi-LAN’s first run against Apple. It has sued the giant repeatedly and collected some money. A big settlement in 2011 involved a host of other companies and dramatically raised Wi-LAN’s profile and stock price.
But the actions filed against Apple over the last 15 months are still a long way from generating serious cash. Meanwhile, Wi-LAN stock and market capitalization have fallen more than 40 per cent in 17 months.
In the September-ending quarter, Wi-LAN profits fell to $2.2 million from $7.3 million a year earlier. Revenue fell to $21.3 million from $27.8 million, although it exceeded the company’s guidance of $19.9 million. Wi-LAN blamed the decline on the timing of fixed payments in agreements signed in early 2011.
Some of this is to be expected. While a company like Apple or Samsung can achieve quick instant sales increases with hot new handsets and tablets, it can take years of expensive slogging in the courts to get the same companies to sign a licensing deal.
Patent-licensing companies can do little but press on, bring in new expensive law firms, shop for receptive courts in different states and buy more patents to drive future lawsuits.
When the price of patents soared in the wake of the $4.5-billion auction of Nortel Networks patents in 2011, market dynamics changed dramatically. Wi-LAN lost a bid for crosstown rival Mosaid to U.S. private equity and has faced greater competition for other patents that have become available.
The patent wars are now dominated by the global conflict between Apple and Google and its Android allies led by Samsung. The two giant adversaries pulled a surprise last week, joining forces to bid a reported $500 million for 1,100 digital imaging patents Eastman Kodak is selling in a bankruptcy reorganization. The two had headed rival consortiums in the early stage of the auction.
Their alliance now is likely an attempt to avoid the final cost spiralling as it did during the Nortel patent auction, when prices jumped five-fold to $4.5 billion.
Kodak needs the money to finance a emergence from bankruptcy with at least $830 million in new financing. Alcatel-Lucent, another troubled company in need of fresh cash, could find that its vast portfolio of patents won’t be quite as valuable, either for sale or to post against fresh loans.
One major consequence or the Apple-Google entente is that patent enforcement companies that were part of the original process will likely lose out. There is no need for partners to advise in the auction process and take some of the patents if the big armies co-operate rather than fight.
While the big players’ action is understandable, it certainly undercuts earlier arguments that they are victims of conspiracies by fellow giants or at the mercy of “patent trolls” that don’t actually do any product innovation.
Wi-LAN, meantime, keeps pushing forward. In September it consolidated earlier patent suits against Apple, HTC and a third company, Exedia, into a single east Texas federal court that is an industry favourite for patent fights. Wi-LAN said the move will accelerate the process and a trial could start next August.
Analysts expect Wi-LAN will report sales of about $90 million this fiscal year, down from $105 million last year. Only one of nine has a “hold” recommendation — which is really a sell in the ambiguous world of analysts — and collectively they think the stock will be worth $8.30. That would be nice, with the stock now flirting with $5.
Wi-LAN bought more patents from Alvarion and other sources this year. It filed suits against Alcatel-Lucent and Ericsson over advanced wireless patents. It is also suing Toshiba and opened a new front against Hon Hai — a Taiwan supplier to Apple and other companies — over terms of agreement on child protection systems in televisions.
Just this week it started a suit against Research in Motion in Florida over Bluetooth access technology.
Read more: http://www.ottawacitizen.com/business/Working+Capital+faces+shifting+patent+landscape/7682611/story.html#ixzz2I9HW6cxX