Wednesday, August 28, 2013

"The Numbers Behind BlackBerry’s Patent Goldmine" (BB.T)

Going pretty far afield with this but there may be a bucko or two here. Plus, it's a lot cheaper than when Mr. Watsa was buying.
From the Wall Street Journal's Corporate Intelligence blog:
Analysts at Scotiabank today shared their take on BlackBerry’s patent portfolio, which will be worth serious money even if the mobile device maker never manages to catch up to the competitors that have eclipsed it in recent years. If the company is serious about ideas of going private, this is where the valuation game gets interesting.
The market currently values BlackBerry at just under $5.5 billion, and Scotiabank says the patents alone could make up a big chunk of that, even if a very conservative valuation method is applied:
We have been suggesting a value of roughly $2.25B based on a discount to what was paid for the NortelNRTLQ 0.00% patents, given the sale of those patents occurred at a particularly opportune time. Again, those patents sold for roughly $1M each and the Motorola patents sold for roughly $735K. Given that BlackBerry maintains roughly 5,136 patents, to get to our $2.25B number the patents would have to sell for $438K each or a 40% discount to the Motorola patents and an almost 60% discount to the Nortel patents
Why such a conservative valuation? Part of it is timing: When the Nortel patent portfolio was sold for $4.5 billion in mid-2011, the mobile industry was in the midst of a frenzy of patent litigation, and the winning consortium of buyers, which included AppleAAPL -2.94%, MicrosoftMSFT -2.68% and BlackBerry, were willing to pay top dollar in an auction where, as the WSJ reported at the time, “the starting offer of $900 million was considered remarkable.”...MORE