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Don't have anything new to add: Less than one month to go until the MSJ hearing!
This week marks 4 weeks until the MSJ hearing, October 17. We are almost there!
In addition to the company having very little overhead, the CEO, Thom Kidrin, is the largest shareholder in the company. He has made it very clear he desires the share price to go up as much as anyone does, because no one stands to gain more from it than him. Dilution, if it occurs, will be barely noticeable, and it will be done in such a way that protects the investment of shareholders. One of the reasons I like this stock is because, since the CEO owns more shares than anyone, he is my ally, not my nemesis, when it comes to watching out for the share price.
It's only a matter of time before the top blows off this thing. I do not expect the general public to hear about WDDD, or have any interest in WDDD prior to the Markman hearing. Unless one is familiar with patent litigation, WDDD appears a very risky stock right now, providing little or no reason to invest.
For those familiar with patent litigation stocks, WDDD offers what I believe is the possibility of one of the largest catalysts in the patent litigation space. A win at Markman is no small ordeal when literally hundreds of millions of dollars are legitimately at stake. I don't think it is a stretch to say that those of us buying into WDDD right now are way ahead of the ballgame. But, as anyone knows, arriving at the ballpark 5 hours before the first pitch may get you a good seat, but then you have to wait for 5 hours, and if very few people show up the first 3 hours, I bet you will probably double check to make sure the game is actually going to be played that night! So it is with owning WDDD right now. But the people will come flooding in soon enough.
Cheers all.
Comments do not constitute a valid legal case for Worlds to be officially denoted a patent troll.
How Much Money Does WDDD Stand to Win Against ATVI?
This summary takes into account the Activision lawsuit only.
From this Investor Summery Sheet posted on ATVI website:
http://files.shareholder.com/downloads/ACTI/2435818763x0x634174/b65ae5ed-ce22-4042-a3be-8fdfd1e96547/01.10%20Q4%20Summary.pdf
Its easy to figure out North America Rev for 2010, 2011 & 2012.
Assuming US is 90% of NA Revenue we can estimate US Rev for those years.
Total US Revenue:
2010 - $2.17 B
2011 - $2.17 B
2012 - $2.2 B
Using this http://tippie.uiowa.edu/krause/spring2012/atvi_sp12.pdf
Activision research report for 2011 I can get the breakdown of % of Revenue for both COD and WOW. For 2011 it was 54% or $2.6 B of the total Revenue $4.76 B
So plugging WOW + COD Revenue of 54% into the 3 years above I get the revenue's Susman will be going after in our suit.
Total US COD + WOW Revenue:
2010 - $1.17 B
2011 - $1.17 B
2012 - $1.19 B
Now using 3%-7% for Running Royalty to determine past damages I get these for the 3 years
RR 2010 2011 2012
3% $35.1M $35.1M $35.7M
4% $46.8M $46.8M $47.6M
5% $58.5M $58.5M $59.5M
6% $70.2M $70.2M $71.4M
7% $81.9M $81.9M $83.3M
RR Total 2010 - 2012
3% $105.9M
4% $141.2M
5% $176.5M
6% $211.8M
7% $247.1M
Going back to 2007 (Due to limit of previous 6 years) I reduce the Rev by 15% each year from the 2010 estimate above to get
RR 2007 2008 2009
3% $21.6M $25.6M $29.8M
4% $28.7M $33.8M $39.8M
5% $35.9M $42.3M $49.7M
6% $43.1M $50.7M $59.7M
7% $50.3M $59.2M $69.6M
Totaling all past damages from 2007 to 2012, using respective royalty rates, I get:
RR Total $
3% $182.9M
4% $243.5M
5% $304.4M
6% $365.3M
7% $426.2M
Looking ahead, for the years 2013-2018 (6 years left on patents), using revenue figures 15% less than 2012 (this assumes WOW and COD will make ATVI 15% less money/year, though it appears they will make the same or more), I get:
RR 5 years 2013-2018
3% $182.1M
4% $242.8M
5% $303.5M
6% $364.1M
7% $424.8M
Combining the amount for past damages (2006-2012) and the amount for future damages (2013-2018), using respective royalty rates, I get:
RR Total $
3% $365.0M
4% $486.3M
5% $607.9M
6% $729.4M
7% $851.0M
To get true final #'s you would have to back out taxes and legal fees. Assuming WDDD keeps 40% of total damages, the stock price/share would be (based on 115M outstanding shares):
RR 40% Price/Share cash
3% $146.0M or $1.27/share cash
4% $194.5M or $1.69/share cash
5% $243.2M or $2.11/share cash
6% $291.8M or $2.54/share cash
7% $340.4M or $2.96/share cash
Assuming a conservative 2:1 P/E ratio, the share price would settle in at:
RR 2:1 P/E ratio
3% $2.54/share
4% $3.38/share
5% $4.22/share
6% $5.08/share
7% $5.92/share
WDDD alleges willful infringement of the patents, thereby allowing the judge to award WDDD treble (triple) damages for up to six previous years (2007-2012). If we treble only the 6 years from 2007-2012, and add this amount to the future damages, the price/share would be as follows:
RR 40% Price/Share cash
3% $292.3M or $2.57/share cash
4% $389.3M or $3.39/share cash
5% $486.7M or $4.23/share cash
6% $584.0M or $5.08/share cash
7% $681.4M or $5.92/share cash
Assuming a conservative 2:1 P/E ratio, the share price with treble damages would settle in at:
RR 2:1 P/E ratio
3% $5.14/share
4% $6.78/share
5% $8.46/share
6% $10.16/share
7% $11.84/share
A few things to keep in mind:
1. Remember, these estimates are for the ATVI lawsuit only. These estimates do not take into account the rest of the MMORPG gaming industry; they take into account the ATVI lawsuit only. Assuming ATVI is roughly 40% of the total MMORPG gaming industry, multiply the price/share by 2.5 to come up with the projected share price of WDDD in 2-3 years after companies settle out of court with WDDD.
2. These estimates are conservative (low). I have hardly done justice to the top end of what WDDD could rightfully win in court. If you follow my process, I assumed revenues lower than reality so that we might arrive at sober, basement-bottom figures absent fluff.
3. The 3% running royalty rate is on the low end; the judge may award WDDD a running royalty rate of 10%.
4. If ATVI decides to settle with WDDD, we can assume the lump sum settlement will be at a discount from the total past damages, and we can assume the ongoing royalty rate will be reduced from what it would be if a jury decided in favor of WDDD. A settlement would be very nice because it puts money in the pocket immediately and usually begins a snowball effect among other infringers to settle as well.
5. ATVI is known for settling; a positive Markman hearing may be all WDDD needs to receive a rather large settlement from ATVI.
6. As you can see, WDDD stands to make much money via enforcement of its patents, and you, the shareholder, stand to make much as well. If WDDD’s case goes to court, and they obtain a trial victory like Vringo (VRNG) did against Google, and willful infringement is proven, WDDD could rather easily be awarded a 5%-7% running royalty rate and be trading at $7-$12/share within 18 months from now. Stay tuned…
Other suits beyond Activision could include:
Disney
Electronic Arts
Facebook
Zynga
Take Two
Nintendo
Square Enix
Ubisoft
Sega
THQ
Namco Bandai
Konami
Google
Yahoo
Cooler,
Can you replace the current sticky with the post just after this (post #14114)? I removed the 2% royalty rate as I believe that will be irrelevant, and I added in a 2:1 P/E ratio summary to give people a visual of the possible share price. The new post is much more realistic, in my opinion.
You're missing what I said at the end of the estimate. My estimates are very low. They include no other lawsuits and no P/E multiple. Also, I do not believe 2% or 3% to be in the equation. 5% and above is more likely in my opinion. I probably should have not included the 2% and 3% in my calculations. 5%-10% would be a more helpful calculation range. And a 2:1 P/E ration would double the lowest figure. Also, if Kidrin offers shareholders a one time dividend (which he said he might) upon a settlement or trial victory, scores of people aware of this will buy in to receive it. WDDD's CEO is no fan of day-traders and has no interest in looking out for them. He is interested in long-term shareholders who stick with the company through the litigation. If a one-time dividend is to be given to shareholders, I suspect the CEO will just come out and announce that all current shareholders as of the announcement will receive the dividend. If this is possible to do, I guess he might do it. And this alone will draw people in ahead of time rather than risk being caught without shares (but this last thought is pure speculation on my part, only an opinion).
Willfulness does not mean the judge has to grant treble damages, but means the judge can grant treble damages. If the damages are not trebled, my guess is the royalty rates will be significantly higher, maybe even as high as 10%.
My estimates are way too low by themselves, but if you know the whole story, they lay the groundwork upon which multiples and investor interest can stack many more dollars/share.
I think your prediction is fair and accurate. The hardest part right now is the discipline of waiting. The temptation to sell out to make a quick buck elsewhere is always present, but it almost never pans out.
5 weeks from today the MSJ hearing will be in progress. The clock is ticking closer.
Saying there will not be any catalysts until October 17 is like saying you know your poker opponent has nothing good in his hand. You don't know if he does or doesn't.
The lack of a PR at this point is probably due to either they have not yet received the paperwork in the mail (these things take time, remember, it is the United States Patent and Trademark Office, a government run entity), or they are carefully weighing other options at the moment (what to do on October 17).
Now is a great time to get in, if you still can. Remember one of the rules about trading patent litigation stocks: buy when others are selling, because the selling is usually confined to one or two panickers, and a few of their proteges, and when they stop selling, the price will rocket back up to where it was. When the selling stops, it usually stops cold. Look at the historical charts. They prove helpful in predicting patters in unpredictable stocks.
It is a trust. It is set to expire mid-2015, at which time your investment in the shares will be $0.00. Read up on it. Make sure you don't own this thing at the beginning of 2015.
Suit yourself. I'm loading up even bigger. Now is exactly the time to buy.
How to Invest in Patent Litigation stocks (such as WDDD)
For the sanity of newcomers, here are some general guidelines which should prove helpful down the road (I wish I knew these when I began):
1. Enter on the dips. 10-20% dips always happen. Wait for them, and when they occur, buy massive amounts of shares. The dips usually do not last very long, and they are usually followed by large runs North.
2. Don't believe hype. Read and digest Pacer documents and PR's, but don't buy into the comments of commentators. If you are unable to interpret Pacer documents, locate someone who can accurately interpret them for you (such as JJ Seabrook on VRNG's message board) and lean heavily upon their interpretations. These must be people you can trust.
3. Be patient. If you're in a patent play to make a quick buck in a week, you'll probably end up losing a quick 10 bucks in a couple weeks. Know what you own, and then own it for months and years, adding to your position on the dips. Don't try to play the flipping game; if you do, don't be surprised if you get flipped and end up with fewer shares.
4. Do not panic sell. Again: DON'T panic sell. Things are almost never as bad as they sound at first. When others are panic selling, I make it a rule to buy at those times. You can get shares at clearance prices amid panic selling. Another way of putting it is this: "Buy when others are selling; sell when others are buying; hold and add when others are holding." That mantra almost always works in these stocks.
5. Invest, don't trade. Many might disagree with me on this, but these stocks are best invested in rather than traded. Read through the posts (some of them are mine!) detailing the frustrations of traders who entered to make a quick buck, only to leave frustrated after a week or a month. Learn the case and invest in the company, and then sit on your investment until the case is finished.
6. These stocks are volatile. One day you'll be up 30%; another day you'll be down 30%. Don't panic.
7. Learn to live without news. If you are unable to live without constant news and re-affirmation that your investment is a good one, then don't invest in these stocks. The silence is deafening. Get used to it. Companies in litigation won't say much; when they do speak, you should listen carefully to what they say and to what they don't say.
8. Call Investor Relations YOURSELF. Call the CEO of Worlds or the IR departments of VRNG and BCYP. They are real people who really know some things which will prove helpful to you. I cannot emphasize this enough: call the company yourself and ask them your questions!
9. Keep your eyes on the end goal. The end goal of these stocks is settlements, buyouts, and trial victories (MSJ hearings, Markmans, actual trials). As long as one of these exists as a viable option, then drown out all the peripheral "noise" and keep your eyes on what really matters (i.e. Worlds has an MSJ hearing on October 17 based on the issue of the dating of their '045 patent. This is the next scheduled event. Pay careful attention to any issues surrounding it.)
10. All patents were NOT created equal. News of what other companies are doing, the developments of other patent cases, variables of other patent companies' licensing agreements/settlements, etc. almost always are irrelevant to your investment.
11. Capital structure matters. Don't trust the number of shares you see at Yahoo Finance or MSN. Go read the SEC filings yourself to see the fully diluted capital structure of your investments.
12. News that does not affect a company's ability to earn future revenue should be heavily discounted. News that does affect a company's ability to earn future revenue should be considered weighty and important.
If "soon" is within the next few months then likely so. With these stocks, there is very little gradual growth. The growth is sudden and massive and then the price shrinks slowly back until the next massive move. Things will be heating up around here in the next 1.5 months, and if a Markman is put back on the calendar, things will get even more exciting.
picked up more shares. didn't think we would see prices this low again. thank you to whoever sold me their shares down here!
Many people buy shares hoping they will make 20% in a week or two. When that doesn't pan out for them, they take losses and go elsewhere in the hopes of making money. These folks usually go from loss to loss, always one step behind profits and always missing out on the run-up due to lack of patience. Such folks often "kick" themselves after the stock they sold days before makes a 15-20$ run.
One of hardest things for investors/traders to do is wait, for months and years. The case here is very strong. It is only a matter of time before the case itself, rather than day-traders coming and going, will become the drawing point for the stock.
Looks like a great day for loading up shares; panic or impatient sellers. Great entry prices for those loading up.
9/9/13 Status of WDDD
Since the status of patent litigation companies is always changing, this post will help update the IHUB followers of WDDD. I hope to update the status once per week and after any major change in status has taken place:
The Motion for Summary Judgment (MSJ) hearing is scheduled for October 17. ATVI filed for the MSJ on the basis that the cover sheet (first page) of WDDD's '045 patent did not show a permanently granted date on or before November 13, 1995. WDDD has always contended the lack of proper dating was a clerical error by the United States Patent Trade Office (USPTO); nonetheless, precise dating of permanent patents is a large key to patent validity. Permanent patents must have been filed, and dated, within one year of the granting of a provisional patent; if they are not filed and dated within one year, the patent is invalid. Judge Casper granted ATVI the requested MSJ hearing; the Markman hearing was postponed. All these legal maneuvers took place between mid-June and the end of July, 2013
On August 14, 2013, the USPTO notified WDDD that the clerical error of the dating of the '045 patent had been corrected (see this post and follow instructions to discover the change: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=91164120). Therefore, the main issue surrounding ATVI's MSJ has been resolved, officially, by the USPTO. The correction paperwork has been initiated, and WDDD expects the paperwork to arrive in the mail within about one week.
Some near term catalysts to watch for between today and October 17 are (note: these are possibilities, not certainties; #1 has the highest probability of occuring; #2 & #3 are only thoughts on my part, neither of which may actually take place, leaving the MSJ hearing to be held on October 17):
1. Within a few days of their receiving the correction paperwork, expect a press release from WDDD saying they have received the USPTO correction in the mail, and therefore have it in hand.
2. A request from WDDD that the MSJ hearing scheduled for October 17 be cancelled for the reason that the issue to be determined at the MSJ hearing (the dating of the patents) has been officially resolved by the USPTO, and that a Markman hearing be scheduled by the honorable Judge Casper.
3. A request from WDDD that a Markman hearing be scheduled either in place of the MSJ hearing or in addition to the MSJ hearing on October 17.
Having the MSJ hearing is not a negative catalyst for WDDD, and in fact could be quite positive as it will reiterate what the USPTO has already affirmed. But if the MSJ hearing is replaced with a Markman hearing, this will prove to be a rather large positive catalyst. We are only 5 weeks away from October 17; expect WDDD's volatility to increase the closer we get.
Cooler,
I corrected one mathematical error and added the 6% and 7% running royalty rates to calculations. When possible, please replace the current damages report sticky with the post just before this one. Thank you.
Cheers all.
How Much Money Does Worlds (WDDD) Stand to Win from Activision (ATVI)?
This summary takes into account the Activision lawsuit only.
From this Investor Summery Sheet posted on ATVI website:
http://files.shareholder.com/downloads/ACTI/2435818763x0x634174/b65ae5ed-ce22-4042-a3be-8fdfd1e96547/01.10%20Q4%20Summary.pdf
Assuming the US is 90% of North American revenue, the total revenues for 2010, 2011, and 2012 are:
Total US Revenue:
2010 - $2.17 B
2011 - $2.17 B
2012 - $2.2 B
Using this http://tippie.uiowa.edu/krause/spring2012/atvi_sp12.pdf
Activision research report for 2011 I can get the breakdown of % of Revenue for both COD and WOW. For 2011 it was 54% or $2.6 B of the total Revenue $4.76 B
So plugging WOW + COD Revenue of 54% into the 3 years above I get the revenue's Susman will be going after in our suit.
Total US COD + WOW Revenue:
2010 - $1.17 B
2011 - $1.17 B
2012 - $1.19 B
Now using 2%-7% for Running Royalty to determine past damages I get these for the 3 years
RR 2010 2011 2012
2% $23.4M $23.4M $23.8M
3% $35.1M $35.1M $35.7M
4% $46.8M $46.8M $47.6M
5% $58.5M $58.5M $59.5M
6% $70.2M $70.2M $71.4M
7% $81.9M $81.9M $83.3M
RR Total 2010 - 2012
2% $70.6M
3% $105.9M
4% $141.2M
5% $176.5M
6% $211.8M
7% $247.1M
Going back to 2007 (Due to limit of previous 6 years) I reduce the Rev by 15% each year from the 2010 estimate above to get
RR 2007 2008 2009
2% $14.4M $16.9M $19.9M
3% $21.6M $25.6M $29.8M
4% $28.7M $33.8M $39.8M
5% $35.9M $42.3M $49.7M
6% $43.1M $50.7M $59.7M
7% $50.3M $59.2M $69.6M
Totaling all past damages from 2007 to 2012, using respective royalty rates, I get:
RR Total $
2% $121.8M
3% $182.9M
4% $243.5M
5% $304.4M
6% $365.3M
7% $426.2M
Looking ahead, for the years 2013-2018 (6 years left on patents), using revenue figures 15% less than 2012 (this assumes WOW and COD will make ATVI 15% less money/year, though it appears they will make the same or more), I get:
RR 5 years 2013-2018
2% $121.4M
3% $182.1M
4% $242.8M
5% $303.5M
6% $364.1M
7% $424.8M
Combining the amount for past damages (2006-2012) and the amount for future damages (2013-2018), using respective royalty rates, I get:
RR Total $
2% $243.2M
3% $365.0M
4% $486.3M
5% $607.9M
6% $729.4M
7% $851.0M
To get true final #'s you would have to back out taxes and legal fees. Assuming WDDD keeps 40% of total damages, the stock price/share would be (based on 115M outstanding shares):
RR 40% Price/Share cash
2% $97.3M or $0.85/share cash
3% $146.0M or $1.27/share cash
4% $194.5M or $1.69/share cash
5% $243.2M or $2.11/share cash
6% $291.8M or $2.54/share cash
7% $340.4M or $2.96/share cash
WDDD alleges willful infringement of the patents, thereby allowing the judge to award WDDD treble (triple) damages for up to six previous years (2007-2012). If we treble only the 6 years from 2007-2012, and add this amount to the future damages, the price/share would be as follows:
RR 40% Price/Share cash
2% $194.7M or $1.69/share cash
3% $292.3M or $2.57/share cash
4% $389.3M or $3.39/share cash
5% $486.7M or $4.23/share cash
6% $584.0M or $5.08/share cash
7% $681.4M or $5.92/share cash
A few things to keep in mind:
1. Remember, these estimates are for the ATVI lawsuit only. These estimates do not take into account the rest of the MMORPG gaming industry; they take into account the ATVI lawsuit only. Assuming ATVI is roughly 40% of the total MMORPG gaming industry, multiply the price/share by 2.5 to come up with the projected share price of WDDD in 2-3 years after companies settle out of court with WDDD.
2. These estimates are conservative (low). I have hardly done justice to the top end of what WDDD could rightfully win in court. If you follow my process, I assumed revenues lower than reality so that we might arrive at sober, basement-bottom figures absent fluff.
3. The 2% and 3% running royalty rates are on the low end; the judge may award WDDD a running royalty rate of 10%.
4. These estimates contain no Price/Earnings ratio multiple. They are a 1 for 1 correlation between stock price/share and earnings price/share. If you factor in a 2:1 P/E ratio (which I believe is fair), you can double the price per share; a 4:1 P/E ration would quadruple the price/share.
5. If ATVI decides to settle with WDDD, we can assume the lump sum settlement will be at a discount from the total past damages, and we can assume the ongoing royalty rate will be reduced from what it would be if a jury decided in favor of WDDD. A settlement would be very nice because it puts money in the pocket immediately and usually begins a snowball effect among other infringers to settle as well.
6. ATVI is known for settling; a positive Markman hearing may be all WDDD needs to receive a rather large settlement from ATVI.
7. As you can see, WDDD stands to make much money via enforcement of its patents, and you, the shareholder, stand to make much as well. If WDDD’s case goes to court, and they obtain a trial victory like Vringo (VRNG) did against Google, and willful infringement is proven, WDDD could rather easily be awarded a 5%-7% running royalty rate and be trading at $7-$12/share within 18 months from now. Stay tuned…
Other suits beyond Activision could include:
Disney
Electronic Arts
Facebook
Zynga
Take Two
Nintendo
Square Enix
Ubisoft
Sega
THQ
Namco Bandai
Konami
Google
Yahoo
Cooler,
I think the damages estimate is more valuable than the status update post, so if it is not too much work for you to remove the status update sticky and replace it with the damages estimate, I would prefer that. I'll try to re-post the update once a week or once every other week to keep people abreast of recent events or non-events, as the case may be.
Cheers.
Coolerheads,
Could you read over my previous post (#14048) and if it looks good, sticky it to give people a low-ball idea of what WDDD stands to make in the ATVI lawsuit?
How Much Money Does WDDD Stand to Win from Activision (ATVI)?
This summary takes into account the Activision lawsuit only.
From this Investor Summery Sheet posted on ATVI website:
http://files.shareholder.com/downloads/ACTI/2435818763x0x634174/b65ae5ed-ce22-4042-a3be-8fdfd1e96547/01.10%20Q4%20Summary.pdf
Its easy to figure out North America Rev for 2010, 2011 & 2012.
Assuming US is 90% of NA Revenue we can estimate US Rev for those years.
Total US Revenue:
2010 - $2.17 B
2011 - $2.17 B
2012 - $2.2 B
Using this http://tippie.uiowa.edu/krause/spring2012/atvi_sp12.pdf
Activision research report for 2011 I can get the breakdown of % of Revenue for both COD and WOW. For 2011 it was 54% or $2.6 B of the total Revenue $4.76 B
So plugging WOW + COD Revenue of 54% into the 3 years above I get the revenue's Susman will be going after in our suit.
Total US COD + WOW Revenue:
2010 - $1.17 B
2011 - $1.17 B
2012 - $1.19 B
Now using 2%-5% for Running Royalty to determine past damages I get these for the 3 years
RR 2010 2011 2012
2% $23.4M $23.4M $23.8M
3% $35.1M $35.1M $35.7M
4% $46.8M $46.8M $47.6M
5% $58.5M $58.5M $59.5M
RR Total $ (2010-2012)
2% $70.6M
3% $105.9M
4% $141.2M
5% $176.5M
Going back to 2006 (Due to limit of previous 6 years) I
reduce the revenue by 20% each year from the 2010 estimate above to get:
RR 2006 2007 2008 2009
2% $9.6M $12M $15M $18.7M
3% $14.4M $18M $22.5M $28.1M
4% $19.2M $24M $30M $37.4M
5% $24M $30M $37.4M $46.8M
Totaling all past damages from 2006 to 2012, using respective royalty rates, I get:
RR Total $ (2006-2012)
2% $125.9M
3% $188.9M
4% $251.8M
5% $314.7M
Looking ahead, for the years 2013-2018 (6 years left on patents), using revenue figures 20% less than 2012, I get:
RR Total $ (2013-2018)
2% $114.2M
3% $171.4M
4% $228.5M
5% $285.6M
Combining the amount for past damages (2006-2012) and the amount for future damages (2013-2018), using respective royalty rates, I get:
RR Total $
2% $240.1M
3% $360.3M
4% $480.3M
5% $600.3M
To get true final #'s you would have to back out taxes and legal fees. Assuming WDDD keeps 40% of total damages, the stock price/share would be (based on 115M outstanding shares):
RR 40% Price/Share cash
2% $96M or $0.835/share cash
3% $144.1M or $1.25/share cash
4% $192.1M or $1.67/share cash
5% $240.1M or $2.09/share cash
WDDD alleges willful infringement of the patents, thereby allowing the judge to award WDDD treble (triple) damages for up to six previous years (2007-2012). If we treble the 6 years from 2007-2012, the price/share would be as follows:
RR 40% Price/Share cash
2% $196.8M or $1.71/share cash
3% $292.2M or $2.57/share cash
4% $393.6M or $3.42/share cash
5% $617.8M or $5.37/share cash
A few things to keep in mind:
1. These estimates are EXTREMELY conservative (low). I have hardly done justice to the top end of what WDDD could rightfully win in court, and the low end is quite honestly way too low. If you follow my process, I assumed revenues lower than reality so that we might arrive at sober, basement-bottom figures absent fluff.
2. The 2% and 3% running royalty rates are on the low end; the judge may award WDDD a running royalty rate of 10% if she likes.
3. These estimates contain no Price/Earnings ratio multiple. They are a 1 for 1 correlation between stock price/share and earnings price/share. If you factor in a 2:1 P/E ratio (which I believe is fair), you can double the price per share; a 4:1 P/E ration would quadruple the price/share.
4. These estimates do not take into account the rest of the MMORPG gaming industry; they take into account the ATVI lawsuit only. Assuming ATVI is roughly 40% of the total MMORPG gaming industry, multiply the price/share by 2.5 to come up with the projected share price of WDDD in 2-3 years after companies settle out of court with WDDD.
5. If ATVI decides to settle with WDDD, we can assume the lump sum settlement will be at a discount from the total past damages. A settlement would be very nice because it puts money in the pocket immediately and usually begins a snowball effect among other infringers to settle as well.
6. As you can see, WDDD stands to make a TON of money via enforcement of its patents, and you, the shareholder, stand to make a ton as well. If WDDD’s case goes to court, and they obtain a trial victory like Vringo (VRNG) did against Google, and willful infringement is proven, WDDD could likely be awarded a 5%-7% running royalty rate and be trading at $7-$12/share within 18 months from now. Stay tuned…
Other suits beyond Activision could include:
Disney
Electronic Arts
Facebook
Zynga
Take Two
Nintendo
Square Enix
Ubisoft
Sega
THQ
Namco Bandai
Konami
Google
Yahoo
Why is anyone buying this stock at these prices? It should be trading closer to its actual value, down around $3.10 to $3.45. The dividend is still 2 months away, and the expiration date of this stock, at which time all shares will vaporize and be no more, is only 1 year and 9 months away. I know oil is high, but because this stock is nearing its expiration, it should be trading much lower. Anyone know who is buying at these prices?
I expect the stock to take sharp dive downward in the next 1.5 months before it climbs up after the dividend announcement.
...I'll let you know in about 1.5 years...
How Much Money Does WDDD Stand to Win?
Spanky and (Coolerheads) suggested the following information as a ballpark figure of how much money WDDD stands to win from ATVI (et al), and how that money will translate into share price. On a quiet day like today, I thought it might be good reading for any newcomers so that all may see the massive potential of WDDD and why so many of us are very heavily invested in WDDD at this point. It also shows why many of us have a long term investment strategy with WDDD. Patent litigation takes time, but making anywhere from 500% to 2000% in one year is worth the time!
ATVI Revenue Breakdown Estimate for Damages from ATVI suit
Modified from Coolerhead's suggestions. Plus adding list of future suits beyond Activision.
From this Investor Summery Sheet posted on ATVI website:
http://files.shareholder.com/downloads/ACTI/2435818763x0x634174/b65ae5ed-ce22-4042-a3be-8fdfd1e96547/01.10%20Q4%20Summary.pdf
Its easy to figure out North America Rev for 2010, 2011 & 2012.
Assuming US is 90% of NA Revenue we can estimate US Rev for those years.
Total US Revenue:
2010 - $2.17 B
2011 - $2.17 B
2012 - $2.2 B
Using this http://tippie.uiowa.edu/krause/spring2012/atvi_sp12.pdf
Activision research report for 2011 I can get the breakdown of % of Revenue for both COD and WOW. For 2011 it was 54% or $2.6 B of the total Revenue $4.76 B
So plugging WOW + COD Revenue is 54% into the 3 years above I get the revenue's Susman will be going after in our suit.
Total US COD + WOW Revenue:
2010 - $1.17 B
2011 - $1.17 B
2012 - $1.19 B
Now using 2%-4% for Running Royalty to determine past damages I get these for the 3 years
RR 2010 2011 2012
2% $23.4M $23.4M $23.8M
3% $35.1M $35.1M $35.7M
4% $46.8M $46.8M $47.6M
RR Total 2010 - 2012
2% $70.6M
3% $105.9M
4% $141.2M
Going back to 2006 (Due to limit of previous 6 years) I
reduce the Rev by 10% each year from the 2010 estimate above to get
RR 2006 2007 2008 2009
2% $15.4M $17.1M $19M $21.1M
3% $23.1M $25.7M $28.5M $31.6M
4% $30.8M $34.2M $38M $42.2M
Using same as 2012 going forward 6 (Kidrin stated 7 years left on patents back in 2012) additional years to 2018 I get
RR 5 years 2013-2018
2% $142.8M
3% $214.2M
4% $285.6M
Adding all years from 2006 - 2018 Total Rev
RR Total $
2% $286M
3% $429M
4% $572M
If we treble those we get triple the total for
RR Total Trebled
2% $858M
3% $1.29B
4% $1.72B
Remember this is only 54% of ATVI so total this out to the full Running totals for all MMORPG ATVI Rev I am using a safe # of 80%. 62% of 2011 Revenue was WOW + COD + Diablo 3 (Diablo 3 went to 5 players paying against each other which isn't the same as WOW or COD, but should fit into our patents IMO).
RR Total ATVI & Trebled
2% $1.27B
3% $1.91B
4% $2.54B
Now that is only 33% of the total Industry so assume only able to get 80% of the total
RR Total Industry
2% $3.08B
3% $4.62B
4% $6.16B
To get true final #'s you would have to back out taxes and legal fees but even if Worlds is only able to keep 40% of those totals it would give us a stock price (based on full 100M shares possible)
RR 40% of total going to WDDD
2% $1.23B or $12.30/sh cash
3% $1.85B or $18.50/sh cash
4% $2.46B or $24.60/sh cash
Other suits beyond Activision could include:
Disney
Electronic Arts
Facebook
Zynga
Take Two
Nintendo
Square Enix
Ubisoft
Sega
THQ
Namco Bandai
Konami
Google
Yahoo
I checked Pacer this morning, and there is nothing new out. The last document is still #106.
I'm right with you on being nuts. Though I don't have as much money as you, WDDD is my largest holding at about 250,000 shares. I keep accumulating shares at these prices. Soon enough the 20's and 30's will be a distant memory and we will be back up in the mid-40's and lower 50's, settling in there until the Markman hearing is within a few weeks from occuring.
For those invested, relax and try to avoid watching every tick every day. The share price will become rather volatile in the coming weeks, but you cannot predict the timing of such volatility. I personally think WDDD is doing quite well: the share price is holding more steady than it ever has in the past year, and this without news. When Susman Godfrey determine it's time to speak, they will speak. Remember one of the first rules about trading patent litigation stocks: get used to no news. Just keep your eyes on the case itself and you will be as much, or more, informed than most other investors. No news does not mean bad news; no news means there is no news to report yet. Remember, everything WDDD says can or will be used against it in a court of law. Therefore, the less WDDD says, the better its chances in the courtroom. And we want things to go well in the courtroom!
5.5 weeks until October 17.
Cheers.
9/4/13 Status of WDDD:
Since the status of patent litigation companies is always changing, this post will help update the IHUB followers of WDDD. I hope to update the status once per week and after any major change in status has taken place:
The Motion for Summary Judgment (MSJ) hearing is scheduled for October 17. ATVI filed for the MSJ on the basis that the cover sheet (first page) of WDDD's '045 patent did not show a permanently granted date on or before November 13, 1995. WDDD has always contended the lack of proper dating was a clerical error by the United States Patent Trade Office (USPTO); nonetheless, precise dating of permanent patents is a large key to patent validity. Permanent patents must have been filed, and dated, within one year of the granting of a provisional patent; if they are not filed and dated within one year, the patent is invalid. Judge Casper granted ATVI the requested MSJ hearing; the Markman hearing was postponed. All these legal maneuvers took place between mid-June and the end of July, 2013
On August 14, 2013, the USPTO notified WDDD that the clerical error of the dating of the '045 patent had been corrected (see this post and follow instructions to discover the change: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=91164120). Therefore, the main issue surrounding ATVI's MSJ has been resolved, officially, by the USPTO. The correction paperwork has been initiated, and WDDD expects the paperwork to arrive in the mail within about one week.
Some near term catalysts to watch for between today and October 17 are (note: these are possibilities, not certainties; #1 has the highest probability of occuring; #2 & #3 are only thoughts on my part, neither of which may actually take place, leaving the MSJ hearing to be held on October 17):
1. Within a few days of their receiving the correction paperwork, expect a press release from WDDD saying they have received the USPTO correction in the mail, and therefore have it in hand.
2. A request from WDDD that the MSJ hearing scheduled for October 17 be cancelled for the reason that the issue to be determined at the MSJ hearing (the dating of the patents) has been officially resolved by the USPTO, and that a Markman hearing be scheduled by the honorable Judge Casper.
3. A request from WDDD that a Markman hearing be scheduled either in place of the MSJ hearing or in addition to the MSJ hearing on October 17.
Having the MSJ hearing is not a negative catalyst for WDDD, and in fact could be quite positive as it will reiterate what the USPTO has already affirmed. But if the MSJ hearing is replaced with a Markman hearing, this will prove to be a rather large positive catalyst. We are only 6 weeks away from October 17; expect WDDD's volatility to increase the closer we get.
MODERATORS:
Could one of you either "sticky" this post as is for the benefit of those wondering where WDDD is currently at, or could one of you who know far more than I about the current status of WDDD add additional status insights and then "sticky" it? I think it would be helpful for everyone who visits this board.
It means:
1. Expect some sort of press release stating WDDD has received official notice in the mail. This should at least shore up the share price, if not bump it up a bit.
2. There is a possibility (not a certainty, but a possibility) that Susman Godfrey will attempt to ask the court for a cancellation of the MSJ on October 17, or a reformulation of the events on October 17 (MSJ + Markman; Markman only). IF they do this, and IF the courts oblige their request on the grounds that the MSJ is now moot because of the USPTO correction, then the share price will head North.
3. Patent litigation stocks such as WDDD feed off Markman hearings and, additional patent enforcement lawsuits, settlements, and trial victories. The closer we come to the Markman hearing (scheduling it; holding it), the more volatile WDDD will become.
4. Be patient. Patent litigation stocks follow the litigation process. Investing in them is really an investment in the lawsuit process in which they are involved. Instead of following the share price, follow the case against ATVI, and things will be less frustrating. And be patient (did I mention that?).
Next week is September. How time flies. Only 6 weeks until MSJ hearing!
Indeed...patience.
Or, in the absence of patience, you could average down and make the journey Northward a little less anxious.
Have a good weekend all.
8/30/13 Status of WDDD:
Since the status of patent litigation companies is always changing, this post will help update the IHUB followers of WDDD:
The Motion for Summary Judgment (MSJ) hearing is scheduled for October 17. ATVI filed for the MSJ on the basis that the cover sheet (first page) of WDDD's '045 patent did not show a permanently granted date on or before November 13, 1995. WDDD has always contended the lack of proper dating was a clerical error by the United States Patent Trade Office (USPTO); nonetheless, precise dating of permanent patents is a large key to patent validity. Permanent patents must have been filed within one year of the granting of a provisional patent; if they are not filed within one year, the patent is invalid. Judge Casper granted ATVI the requested MSJ hearing; the Markman hearing was postponed. All these legal maneuvers took place between mid-June and the end of July, 2013
On August 14, 2013, the USPTO notified WDDD that the clerical error of the dating of the '045 patent had been corrected. Therefore, the main issue surrounding ATVI's MSJ has been resolved, officially, by the USPTO. The correction paperwork has been initiated, and WDDD expects the paperwork to arrive in the mail within about one week.
Some near term catalysts to watch for between today and October 17 are:
1. A press release from WDDD saying they have received the USPTO correction in the mail, and therefore have it in hand.
2. A request from WDDD that the MSJ hearing scheduled for October 17 be cancelled for the reason that the issue to be determined at the MSJ hearing (the dating of the patents) has been officially resolved by the USPTO.
3. A request from WDDD that a Markman hearing be scheduled either in place of the MSJ hearing or in addition to the MSJ hearing.
Having the MSJ hearing is not a negative catalyst for WDDD, and in fact could be quite positive as it will reiterate what the USPTO has already affirmed. But if the MSJ hearing is replaced with a Markman hearing, this will prove to be a rather large positive catalyst.
MODERATORS:
Could one of you either "sticky" this post as is, for the benefit of those wondering where WDDD is currently at, or could one of you who know far more than I about the current status of WDDD add additional status insights and then "sticky" it? I think it would be helpful for everyone who visits this board.
Cheers.
This is very helpful. Looks like laches will indeed be something that will have to be argued vehemently for, but the case for it is very solid, and also very lucrative. Looking forward to the MSJ and Markman hearings.
I check Pacer for any and all information as I want folks on this board to be made aware of the legal paper trail and judgments surrounding this case.
It's a great day for loading, by the way. Loving this low volume. It makes accumulating massive amounts of shares, dumped by the impatient, extremely easy.
Nothing out on Pacer this morning. The last document out was #106 posted earlier.
I'll check it each day. If something comes out I'll post it here.
Cheers all.
It's been a few quiet, peaceful days. Sort of refreshing.
Excellent research! Thank you for all the information provided in this post. Read thru a couple of cases. Now I see the point of EDVA's previous article on the issues at hand. WDDD's case looking strong, especially since the patents are well clarified (thanks in no small part to the USPTO forcing them to clarify and re-clarify the patent when it was first invented).
You make a very good point. I had not thought about it the way you just presented it. WDDD is in a win-win situation: win the MSJ hearing, or have the Markman hearing scheduled in its place. It will be entertaining to see what transpires.
I agree with you; it would be in WDDD's long-term interest to have the MSJ hearing and hear the Judge declare, "MSJ DENIED!" But it would also be in the best interest of WDDD to have the Markman substituted for the MSJ hearing. Either way is a positive for WDDD.
Cheers.
Quote:
"Is there some other interim catalyst at play here that you are anticipating?"
Yes:
1. I anticipate a PR stating the USPTO correction is in hand (has arrived in WDDD's mailbox).
2. I also anticipate a request by Susman Godfrey that the Markman hearing be scheduled either in place of MSJ hearing or in addition to (same day) MSJ hearing, making the case that since the USPTO office paperwork is in hand, the MSJ hearing is a waste of judicial time.
I suspect #1 above will take place within 1-2 weeks (3 at most). #2 above is conjecture on my part. I will not be surprised if #2 doesn't take place at all, but neither will I be surprised if some version of #2 is requested, even if Judge Casper turns it down.
Just thinking out loud.
WDDD is in the calm before the PR/Pacer storm. Exciting days and weeks ahead. Get ready for movement.
Pacer Document #106
Here is a rather benign Pacer issued today; for your viewing pleasure (pun intended):
Full docket text for document 106:
ELECTRONIC NOTICE TO COUNSEL: A notice was issued on August 9, 2013 regarding possible participation in the Cameras in the Courtroom pilot program for the hearing scheduled for October 17, 2013. In accordance with the program procedures, a response is required by both sides, either consenting or declining to participate in the program. The clerk has not yet received a response from all counsel. (NOTE: Counsel for defendant has submitted a response.)Counsel are directed to the court web site at http://www.mad.uscourts.gov/general/cameras.html to determine if they wish to consent to video recording. Responses must be submitted by September 4, 2013. (Hurley, Virginia)