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Forum - DD DEN of Picks (Eastman Kodak Company - EK)    Comprehensive, well researched, Quality DD for buy and holds

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From: Sqwii (Rep: 389)Date: 09/05/2011 17:25
Forum: DD DEN of Picks - Msg #723 - List EK msgs Thread #673290304 (Rec: 0)
Nokia and Microsoft reached a patent licensing agreement with Canada's Mosaid Technologies, illustrating another way patents can provide revenue in the tech industry.
Mosaid will receive 2,000 free wireless patents from Core Wireless, which holds them for Nokia and Microsoft, but will pay the costs of reaching licensing deals with other companies in return for a 30 percent cut, which may be lucrative for Mosaid.

With this arrangement, Nokia and Microsoft are effectively outsourcing potential patent battles to Mosaid, who will be on the lookout for violations to this patent trove and will litigate settlements, kicking a share up to Nokia and Microsoft while keeping a tidy sum for itself.

Mosaid's chief executive John Lindgren told Reuters the deal will be "transformative" for the company, estimating the revenue from future licensing will likely exceed its revenue from the first 35 years in business.

"The numbers from this are going to be potentially so large as to make up the majority of our revenues going forward," he said.

Under the terms of the deal, any change in ownership of the patents would need approval from both Nokia and Microsoft, which earlier this year inked a partnership stipulating Microsoft provide the operating system for Nokia handsets.

The agreement for the wireless patents will add 60 percent to Mosaid's existing patent portfolio, which previously focused on semiconductor technology to generate the majority of the company's revenue.

According to Lindgren, the wireless patents Mosaid can now license are stronger than those included in Nortel Networks' patent sale earlier this summer, which sold for $4.5 billion to a consortium of buyers including Apple, Research In Motion and Sony.

Lindgren said deal includes 169 patents for the emerging wireless broadband technology known as long-term evolution, or LTE, compared with the 277 that Nortel had. He added the current patent deal offers more than 900 patents for current 3G technology, while the Nortel trove had only 11.

Mosaid's acquisition marks the latest in an ongoing rush for patent protection because of increasing litigation in this area, involving nearly every major player in the industry. The news follows Google's proposed $12.5 billion purchase of Motorola Mobility in August, a move the search giant may have made to acquire the company's thick stack of over 24,000 approved and pending patents.

The Mosaid deal offers an innovative model for managing patents and rests on the assumption that patents are increasing in importance in the industry. As patent infringement litigation continues to escalate in the tech industry, the joint venture will likely increase in prominence, as Mosaid becomes a watchdog for two patent-rich companies.

The agreement may also help Mosaid fend off a hostile bid from fellow Ottawa-based patent licensing firm, WiLan. Mosaid is expected to respond to WiLan's unsolicited bid by September 7.

Could Apple Take a Bite Out of Kodak or Netflix?

by Justin Dove, Investment U Research
Thursday, September 1, 2011

It’s anyone’s guess how Apple (Nasdaq: AAPL) will handle the departure of its prodigal son, Steve Jobs.

The market has taken the news in stride as Apple’s stock is up roughly three and a half percent since the news was announced last Wednesday.

But how will Apple replace a man that led it from likely bankruptcy in 1997 to the largest company in the world in 2011, if only for a brief moment?

Nothing against Apple’s new CEO, Tim Cook, but we don’t really know much about him. Especially if he has the same knack for understanding his market like Jobs did. It’s a tough act to follow.

Jobs Out of Picture, Apple Could Turn to M&A

A recent Bloomberg article postulated that Apple could turn to mergers and acquisitions now that Jobs is out of the picture.

“(Jobs) always grew from within,” said Arvind Malhotra, an associate professor at the University of North Carolina. “If lack of his vision and availability of his position causes the future pipeline not to be there, that’s when the acquisition model comes into play. They’re sitting on a cash pile.”

Malhotra, who has taught Apple’s business strategy for ten years, went on to speculate that a company such as Netflix (Nasdaq: NFLX) may be good for Apple.

According to that same Bloomberg report, Netflix declined comment on the situation. But Malhotra seems to think such a move would help Apple boost its revenue through boosting its media content.

After all, Apple did just pull its $.99 streaming TV show service due to poor reception. Apple has also been struggling to enter the television market with its Apple TV service.

Netflix itself has been struggling a bit after a meteoric rise over the past three years. The stock is down about 20 percent since Netflix decided to raise fees to its customers in July.

There at least seems to be some possible synergy between the two. But there’s no word on whether the companies are talking.

Eastman Kodak’s Patents

Another possible acquisition that would make sense for Apple would be Eastman Kodak (NYSE: EK). Kodak itself is a 131-year old ghost of a company that missed out on digital. However in the age of patent wars, Kodak’s digital imaging patents could be very valuable to a company like Apple.

Not to mention Kodak is currently seeking digital imaging royalties of $1 billion from Apple and Research in Motion (Nasdaq: RIMM).

According to Bloomberg, Kodak’s patents alone may be worth five times its market cap. The price may not be much considering Kodak’s market cap is only $879.79 million – small potatoes compared to the $28 billion war chest Apple is sitting on.

But Apple reportedly has some competition as Microsoft (Nasdaq: MSFT), Google (Nasdaq: GOOG), and Samsung are also rumored to be bidding for Kodak.

Can Tim Cook Fill Jobs’ Shoes?

Apple certainly hasn’t been one to make large acquisitions under Jobs. But now that he’s gone, we don’t know what will happen.

There’s also the dynamic patent wars, which basically forced Google’s hand in acquiring Motorola Mobility (NYSE: MMI) recently.

Regardless, it will be interesting to see how Cook looks to fill the shoes of one of the most prolific CEOs ever.

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