Inc. (IDCC) stands a gleaming target
for acquisition with its 8,800 patents. Its intellectual property war
chest includes patents on key 3G and 4G LTE technologies -- critical to modern
I. A Big Auction
The company is currently up for auction with a market capitalization of $3.16B
USD, as of early Thursday.
The key question is how much the sale will fetch. InterDigital was
counting on recent patent strife in the mobile market to drive up its price to
higher than expected -- similar to Nortel Network's 6,000 patent library, which
sold for $4.5B USD to a coalition of Apple, Inc. (AAPL), Research
in Motion (TSE:RIM), Microsoft
However, the Nortel sale reached such heights because of Google, Inc.'s (GOOG) continued
bidding. With Google announcing the purchase
of Motorola Mobility, Inc. (MMI) this Monday -- holder of
17,000 patents -- it is unclear whether it will feel it necessary to bid for
That could make a huge difference in the auction. States Deutsche
Bank analyst Brian Modoff in a comment to Reuters,
"The problem InterDigital has is that Elvis has left the building. He's
got his date. The problem is finding somebody else to whom it's
necessary. It could get acquired, but not at where the stock is at (now)."
II. Who WILL Bid?
Apple is still expected to be a key bidder. Apple seems determined
to continue its legal attack  on Android handset makers. And while
Google may be relatively safe from suits now, its less IP-endowed partners
like HTC Corp. (SEO:066570)
may still be fair game, should Google fail to act in their protection.
In this case, though, HTC should be partially safe, as it -- along with
Apple, Samsung Electronics (SEO 005930), Research in Motion -- licenses
InterDigital's 3G technologies. However, with the 4G transition looming
it is unclear what companies license InterDigital LTE IP. Thus HTC
-- who has a market cap of $655B USD -- could still make a bid for the 4G
portfolio as a tool to potentially ward off Apple.
Nokia Oyj. (HEL:NOK1V) who
will soon primarily
make Windows Phone 7 handsets, is a non-licensee who is reportedly
interested in the portfolio for defense purposes, as well.
For Apple, the portfolio would allow it to attack non-licensee Android (and
potentially Windows Phone 7) handset makers. While about half of handset
makers license the portfolio, many still do not. It could also use the 4G
part of the portfolio to sue companies like HTC, who currently only license the
If the portfolio does see sufficient interest from device makers, it may see
some bids from chipmakers, as well. Qualcomm Inc. (QCOM)
is among the firms reportedly interested in the portfolio, from a chip making
One factor devaluing the portfolio is alternatives on the market, such
as Eastman Kodak Comp. (EK) which
owns 1,100 digital imaging patents valued
at around $3B USD by recent estimates.