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This has nothing to do w/VRNG's patents or the case whatsoever. This is simply GOOG re-packaging their services and presenting it in a way that allows them to charge clients more, but for which many clients don't like because it now only allows them to have "one" campaign (so-to-speak) that is to be deployed across all device formats (desktop, phone, tablet, etc) whereas previously clients were able to customize specific campaigns targeting desktop users vs mobile users. GOOG simply re-packaged its offerings by promoting it as "one campaign that can be deployed across all devices", making it sound like a great thing for their clients. See link below for more info:
http://www.mobilemarketer.com/cms/news/advertising/14752.html
smitter,
As I am not a gamer myself and have never played either COD or WOW, would you know whether MMORPG has always been part of these franchises (i.e. PC box sets) or were they only incorporated when these titles went online and became available for connectivity via consoles?
TIA
And why do you simply assume that I am snoozing? You have zero idea what extent of holdings I have in WDDD.
And if you believe that it only takes a couple days to do a thorough DD, then that is your right to do that for your own investments, but many investors spend much more time vetting the details. In addition, DD is always ongoing as information changes, market conditions change, etc.
Good morning, Tink,
I will try to call TK soon, but today is starting out like a "typical Monday" w/my day job, so we'll see how quickly I can put these fires out! But I'm not sure he can answer the questions you posed since they would involve indirect disclosure of the damages amount, which would be premature and likely still unknown at this time. But I'll ask anyways when I get the chance!
And, yes, my handle is "newbie" on the free forums board, which I disclosed when I first setup my account here on iHub a few weeks ago ("newbie" was already taken here).
I do agree that there is still much to be gained here, that this is an opportunity to get in on the ground floor of something that has the potential to evolve into something extraordinarily big.
However, as you know from the free forum, I am a big proponent of investors taking time to do their own DD and to vet information/assertions made by others, be it in posts or articles. Which is what I have done and am continuing to do currently.
I concur that at these current prices, the risk is low; however, it does not mean that investors who plan to stick around should wait until it's too late to begin doing serious DD to enable them to have a proper assessment of where the risk needle is pointing as the sp continues to rise and breaks thru reistance after resistance.
It's just that whenever an investor sees uber-exuberant pumping, warning bells rightly beging sounding off -- especially so in pennyland. This board has ensured that everyone is always fully-aware of the best case scenarios each and everyday, but without caution, level-headedness, and the discipline to maintain a measured and balanced perspective, an investor will find him/herself blindly lured by the song of the sirens.
Good luck to us all!
OK, good to know. I'll try to ask him when I call. It seems that many plaintiffs in these types of cases have made some kind of announcement when they have the amount calculated that they intend to assert -- so if TK decides to announce it as well, this should be another catalyst once word begins spreading about the magnitude of the claims!
LOL, thanks for sharing the info from your call w/TK.
I will try to ask when I call him, but to not risk redundancy, would you happen to have asked him when he anticipates SG completing their damages assessment?
The CEO told me the contingency fee numbers are confidential but that they are better than the normal going rate, FWIW.
@smitter,
Appreciate your feedback as well. Substantive feedback is all I have been seeking and you, Celtics, and LOL have each been providing pieces of the puzzle.
Now obviously everyone will have there say but a .57 cent valuation is actually quite a slap in the face to WDDD..and it's shareholders.
I have done extensive dd myself and your valuation has Gaping holes in it.
First off as you openly admit you pick 150 mill which is completely and utterly a joke in itself. We're talking 2001 to Present - to- Future Royalties and all you feel WDDD is entitled to is 150 million dollars? Wow... Just last yr alone ATVI did 4 billion plus dollars. Multiply that out by previous and future Growing revenue and most certainly WDDD is entitled to more than 150 million dollars.
I believe your 50% calculation of Susman Godfreys cut to be 15-25% to high.
150 million is a joke and very disrespectful to even Max Tribble.
Yes, and I like your way much better as well, but we both know that what we like/want and what we will get often don't match up when it involves the unpredictable world of litigation.
As I stated from the beginning of these threads, Rain, my objective is solely to perform my own DD and come up with some parameters for establishing potential valuation ranges -- preferably using substantive data in lieu of my imagination.
But again, thank you for a lot of the heavy lifting that you have done in preparing many investors -- both old and new alike -- for WDDD. It is clear by your many posts that you have done a lot of DD that many here are benefitting from.
en.wikipedia.org/wiki/Call_of_Duty
2003 first year
if I use your hypothetical value of 150m dollars ( JUST FROM ACTIVISION)If Susman and Godrey's take is 50% which may be high. My understanding how the vig works is in the area of 35% to 40% before a trial and if Goes the distance 50% is probably abot right. And the 50% if it comes to that is well worth it as you have not only Susman and Godfrey but the "Legend" Max Tribble! Also WDDD HAS A FAVORABLE NOL OF 40M SO USING YOUR FIGURES THE #s NEED TO BE ADJUSTED FOR THE 40M TAX FREE CREDIT IN ESSENCE! SO 150m less 75m ( IF GOES TO TRIAL at 50%) THE TAXABLE AMOUNT IS 75m less 40m (NOL) thats 35M taxable far different #!
Frankly on your other statement saying nothing else is generating anything is not correct at all. The 150m that YOU are alluding to is solely for Activision. That Number is approx 4 billion per anum with WOW and COD and will experience nice growth over the next 5 years not go down. Activision represents 33% that is what you are basing your #s on which u need to adjust with the FAVORABLE NOL of 40M. Also the industry is 12 billion dollars so you can clearly use a multipier of 3x (AS 67% is left to be had approx 8B) and TRIBBLE didnt sign on just for ACTIVISION as well.
Appreciate the reply, LOL. Ran out of posts so just now got my new allotment of 15 for the new day!
He was asked about laches and he did not feel it would apply, based on that, and no this isn't a scientific fact, but based on that it's fair to assume the past damages will go back 6 years.
You will not find the exact contingency fee as that is confidential, the firm wouldn't want clients comparing with other clients, as there are many factors involved with how they charge one company versus another.
Feel free to call the CEO, I'm sure he will answer what he can.
LOL, shades of Modernist revisited...
@LOL,
As I stated, the scenario was completely hypothetical. Clearly, willful is huge, but difficult to win on, so to include it at this point as anyting but gravy would seem risky to someone like me, but to each his own!
But it is these types of numbers which is exactly what I'm trying to get at for folks. Pieces of the puzzle which can be quantified or at least put into a ballpark range so that investors have a general framework for interpreting on their own what they feel may be the high and low ends of their individual valuations of the stock.
So actually I clearly said take profits before markman enough to be riding risk free into markman.
From a trading perspective, I couldn't agree with you more, Rain.
But you and others here are also actively encouraging new investors to hold thru the decision by continually pointing out the strength of the patent, the reputation of the outside counsel, etc.
To this end, traders and investors may have contrarian interests with regards to wanting to know a reasonable basis upon which to calculate some parameters.
For example, if the damages being claimed is announced in June shortly before the commencement of the Markman as being only $150M (not saying it will be by any stretch, but just using a hypothetical example), if Susman Godfrey's contingency is 50%, this makes WDDD's take $75M. Adjust for taxes, and this dwindles even further to ~$48.75M. Using ~85M O/S shares, and this equates to $0.57 accretive value to the sp. With nothing else generating revenues for WDDD, $0.57 may be all WDDD will be worth.
And if a chunk of this is to be paid in the form of future royalties, then this value gets discounted even further due to the time factor.
Now let's say that the runup in the sp continues and hits $1 or even anything north of $0.57? Sure, any investor whou bought in prior to $0.57 should at least break even, but clearly there will be many many investors who are being encouraged to buy-in at levels between $.57 and $1 based solely on Vringo-style pump and hype.
So, again, for trading purposes, I find no fault with your pumping (heck, most of us here, including myself, have already profited handsomely by rinsing/repeating) -- after all, caveat emptor. But for those you are encouraging to buy in and hold because of the merits of WDDD's case... ...well... ...but you already know this...
My thoughts exactly...
I think many of us here would be interested in the numbers you have crunched, Rain, considering the extent of DD you have done. Would you care to share with all of us whom you have encouraged to initiate positions in WDDD the back-of-the-napkin calcs that you used to determine the ballpark value of this litigation?
Royalty rates vary significantly depending on patent category. Although more and more difficult to attain, royalties for other software infringement has been all over the map, sometimes as high as 15-25%. I wouldn't count on that for WDDD, but it illustrates the disparate range that is out there.
The more important metric would be revenues related to the two flagship franchises: WOW and COD. Having an estimate of this base will be key in formulating valuation scenarios at the various RR levels.
For example, if we know that COD generated $1B in sales over its initial 15-days of release last Xmas season, how much did the prior version earn during the previous 2011 Xmas season? And did the sales during the first 2-3 months of release end up comprising 90% of annual sales? An argument can certainly be made that for a product of this nature, sales crash significantly month-over-month as core customers typically buy their copy early (just like the iPhone phenomenon).
And how comparable are WOW revenues relative to COD?
And then of course, we need to have an idea of how many years. This should be relatively easy to figure out, especially for those of us who play these games. I personally am too old to have interest in these games, but easy questions for those here who do play (or have kids who play):
(1)
How long has COD and WOW been out? Over six years yet? Or are these more recent titles that were born only a few years ago?
(2)
From the first version of the games when they launched, did WOW and COD already incorporate the MMORPG element or was this only incorporated into later releases?
This will enable investors to begin forumalting REASONABLE valuations and projections in order to make well-informed decisions based on measurable criteria and not on someone else's hype.
Yes, but there are usually preliminary ballpark numbers/ranges that are known at this time.
If you are saying that no one on this board has any clue as to any of these 3 metrics, then I would be extremely curious as to what the basis is for the pre- and post-Markman sp projections that seem to be prevalent here on this board!
I, and I'm sure all legitimate investors, would hate to see that these projections were not based on anything of substance!
For Rain or anyone who is able to comment:
So in all the DD that has been done on WDDD, it would seem that knowing the following would be critical to formulating even the most basic of potential valuation ranges:
(1)
How far back WDDD is claiming infringement for
(2)
Annual sales for the primary COD and WOW franchises
(3)
Contingency fee rate for Susman Godfrey
Without these key data points, would you mind elaborating on whether you concur with many of the posts on this board that promote a $1-$2 PRE-Markman sp (not to mention an additional multiple beyond that following a favorable ruling, but first things first, which is PRE-Markman)?
I do believe there is room for this name to run, but I am at a complete loss for how anyone has been able to come up with a sp target w/o at least having a reasonable estimate of the 3 metrics listed above.
TIA
@Rain,
Would you know the following:
(1)
How many years back WDDD is claiming for past infringement? Is it the full 6 permitted by the USC?
(2)
What the total revenues were for COD and WOW, respectively (or in aggregate) for the past years being claimed? I see from a prior post that the most recent COD released this past Xmas season generated $1B just in its first 15 days.
(3)
What is the contingency rate that Susman Godfrey is getting for representing WDDD in this case? I thought I read somewhere that it was 50%. Is this right or is it not that high?
TIA
yes, 7,614,581 shares have traded in the last 6 days and today being a record volume day i think.
with a float of only 20-25 million and given the recent volume and if only 50% are held or have been removed as a result the float has been reduced to somewhere between 21 million and change to 16 million and change.
Don't get your hopes up too much on getting weekly updates! Litigation, by its nature, is methodical and tedious, and until there is something significant that has been deemed "official", neither party is really at liberty to say much of anything publicly.
The one thing that ensures that we will know when something official occurs is the fact that WDDD is a publicly traded company and is required by the SEC to file an 8-K whenever a material event occurs.
Anything else you hear will simply be rumor and speculation, so gauge its worth and reliability accordingly!
If ATVI knows they got caught with their hands in the cookie jar AND they make strictly a business/economic decision, then a settlement should be a no-brainer, regardless of whether an injunction was requested or not.
I can't see why they would base their decision on anything other than economic reasons.
They aren't in the same situation that the G-word is in their case againt the V-word, since G viewed V as a troll and many believe that G has longer-term economic interests in mind in dragging their case out -- i.e. making an example out of V in order to deter future would-be trolls.
In any event, being a PE, claiming willful, and getting that request for injunction on the record can only help our cause!
@Rain,
Would you know the following:
(1)
How many years back WDDD is claiming for past infringement? Is it the full 6 permitted by the USC?
(2)
What the total revenues were for COD and WOW, respectively (or in aggregate) for the past years being claimed? I see from a prior post that the most recent COD released this past Xmas season generated $1B just in its first 15 days.
(3)
What is the contingency rate that Susman Godfrey is getting for representing WDDD in this case? I thought I read somewhere that it was 50%. Is this right or is it not that high?
TIA
"Gotcha, I thought the other one gave information on all of the patents infringed upon. Either way, the patents are pretty similar, but from what I have learned, the court only needs to find ATVI guilty of infringing on one of the seven patents and WDDD still gets a fat compensation :D So WDDD has great odds.
I say either two things happen here:
1) ATVI settles before the court date. They have plenty of time to decide and mediate between the two parties to come to a nice agreement.
2) ATVI says, "SCREW YOU!!" to WDDD, because ATVI has a lot of cash and might as well take on WDDD in court. Thing is if they lose in court the sum paid to WDDD will likely be much higher!"
Egads, I feel like I'm living in a real-life Groundhog Day! Just replace ATVI w/the G-word and replace WDDD w/the V-word and I feel like I've been transported back in time 7-8 months!!!
HOWEVER, three HUGE differences are that (1) WDDD is a PE, (2) WDDD is claiming willful infringement from the get-go, and (3) WDDD is requesting a permanent injunctiion as part of the initial complaint.
The existence of these three conditions makes this a night-and-day comparison w/the V-word, and should realistically increase the odds of a settlement significantly.
Who knows? All I know is that we've seen this scenario numerous times already and it ended up just being speculative investors who loaded up on Friday afternoon just in case news broke AH or over the weekend.
Would love for it legit this time, but if someone did know something, I would suspect volume would be a heck of a lot heavier w/a bigger rise in the sp as there is no such thing as a leak that stays secret in the market.
JMO...
Rain highlights an important point re: volume. First and foremost, you can't fight volume. It can take you on the ride of your life -- or, if you're on the wrong side of the bet, you'd better clear out of the way ASAP.
And, IMHO, the volume metric by itself tells only half the story here. The most important metric that folks need to keep in mind is the low market cap. It's under $20M. Just think about that. Who cares about 80M shares O/S. The float is much lower. BUT, even if all 80M shares were available, don't fall into the trap of being scared off by such a big number. Take a step back and understand the $$$ amounts involved:
Even if the sp were to hit $.30, with a nominal $10k investment, that is already ~33k shares. This means that if there were only 1,000 retail investors out there buying this name, this would already account for ~33M shares.
And in the whole world, I can't imagine that there wouldn't be more than 10,000 retail investors who will buy shares of this name. Granted, not all will have a $10k stake (which isn't even all that large).
Look at it another way: Even if only 5,000 investors buy in with an average stake of $5k at a sp of $.30, this accounts for ~83M shares already. Think about that. Look at the total O/S count again.
Oh, and we haven't even begun to account for the deep pocketed investors that we all know. Just amongst this board itself, I bet collectively we know at least a dozen investors who can and will stake $100k or more into this name. That's another ~333k shares for each of them, and that's only if they only invest $100k.
The laws of statistics also will likely assure that there will be a small number of uber-deep pocketed big boys who will invest between $500k-$1M into a spec play with the risk/reward ratio that this name has. That's another ~1.6M-3.3M shares each.
The volume will be there. Volume creates buying pressure. The laws of supply and demand take care of the rest.
Economics 101.
And all this is just PRE-Markman. I haven't even begun to talk about the level of interest that will follow a favorable ruling...
Great post. I agree with everything you said along with everything you didn't say but probably meant to...
Tom,
I would suggest permanently deleting that old timeline you keep pasting up. It was from Steve Kim's free forum board, which has been updated many times since (trust me, I know). Here is the latest one (you guys can keep abreast on updates to this via the KEY DATES thread over on that board):
ANYTIME NOW
All post-trial motions other than 822 are now fully-briefed and, as such, JJ can technically rule on them at any time now. Keep in mind that there is no requirement for JJ to rule within any specified period of time, so in theory the rulings can come down anytime now or they can come down 2 years from now. See SCORECARD thread for details of specific motions.
SEPTEMBER 24, 2013
Trial begins for ZTE (Germany) suit.
Note that this is separate from the suit against ZTE (UK).
TBD by JJ
Schedule for opposition brief as well as reply brief to 822. After TBD briefing deadline passes, JJ can rule at any time.
TBD
Awaiting scheduling and announcement of trial date for ZTE (UK) suit.
TBD
Awaiting scheduling and announcement of both Markman and trial date for MSFT suit.
I know exactly what VRNG stated was their reason for being stunned. Keep in mind that they never used the words "always" or "never" -- but rather words like "typically".
In the absence of CRYSTAL CLEAR language from JJ during pre-trial positively stating that he WILL NOT address laches while the jury remains seated, then it was very much an assumption by VRNG's counsel that JJ would simply follow "normal" procedures and do what most other cases have "typically" done.
For an attorney, especially one with the reputation that DS has, I would very much consider this a fatal assumption on their part to not have all bases adequately covered just in case, if it turns out to be true that JJ never provided this type of crystal clear assurance that laches would not be addressed while the jury was still seated.
This is why I stated previously that the key is getting a hold of the court transcripts to see for ourselves what exactly was said and by whom.
But again, as I also said, the issue is moot now anyways.
Until or unless we get a hold of actual transcripts to see how the conversation actually played out, we don't know whether (1) JJ really did "break his word" and raised the laches issue early, or (2) VRNG made a fatal assumption in the language JJ used that resulted in a misinterpretation and misunderstanding of what JJ said.
Whatever the reason, can't cry over spilt milk now, especially seeing how JJ already denied 835. If VRNG really feels strongly about this procedural ms-step, then we will see their full defense on it in their Notice of Appeal, should it get that far.
This is stale and outdated. Please delete so as to not confuse others. Thanks...
If you really believe that, then you are also implying that the appellate judge (who has not even been assigned yet as there has yet to be a Notice of Appeal filed) has also been pre-selected in advance to be assigned to this case and that this appellate judge is also on the take.
Because that is the only way -- under your theory -- that JJ could "get away with this" and "not be held accountable". It is called checks and balances and any party who feels that they have been wronged at the trial court level can appeal up the line all the way up to the SCOTUS.
So if this is truly as conspiratorial as you suggest, then this corruption is going all the way up to the Supreme Court Justices, then, wouldn't it -- at least if JJ has been setup to be able to "get away with this", right?
If you really believe that, then you are also implying that the appellate judge (who has not even been assigned yet as there has yet to be a Notice of Appeal filed) has also been pre-selected in advance to be assigned to this case and that this appellate judge is also on the take.
Because that is the only way -- under your theory -- that JJ could "get away with this" and "not be held accountable". It is called checks and balances and any party who feels that they have been wronged at the trial court level can appeal up the line all the way up to the SCOTUS.
So if this is truly as conspiratorial as you suggest, then this corruption is going all the way up to the Supreme Court Justices, then, wouldn't it -- at least if JJ has been setup to be able to "get away with this", right?
I would be curious as to how material the royalties were estimated to be for either party.
Although the exact royalty rate may be confidential, estimates could easily be inferred based upon all the pre-trial and in-trial testimony, in particular testimony from damages experts, relevant revenues derived from the infringement that came out during trial, etc.
I'm sure that similar to our case here and the VHC-AAPL case that went on concurrent to ours, it was fairly comnon knowledge the potential size of the pie that was at stake.
Reason this is important is that the key is materiality to each respective company's financial statements to the extent it may affect a reasonable investor's decision.
With NOK and AAPL, given the size of each company, it could very well have been that the amounts were not deemed material to either party.
GOOG would also fit this description where any settlement could be deemed immaterial.
But for VRNG, any settlement would be incredibly material to shareholders, and so I'm not sure that they would be granted a waiver from the SEC to sidestep the requirement to file an 8-K to report the settlement and provide at least basic high-level parameters of the terms.
rare for this place, isn't it? Over/Under of 2 minutes (postyle knows what this means...)
Morning fellas,
No more football on Sundays so I guess I'm stuck here with you all... :)
To be clear, I never said that I do not believe there will be a run-up. My concerns, which I have previously expressed both here and in a comment to EDVA on "you know where", is simply that without TUT involvement, it will be extremely difficult for retail by itself to bring in the volume necessary to create enough buying pressure to run the sp up to the $1 pre-Markman level that EDVA was forecasting.
That's a 4-5 bagger, my friends. I strongly believe that there will be a runup, and believe that there is a strong chance for the sp to double pre-Markman, but a 4-5 bagger w/o TUT support just seems a bit far-fetched to me.
Hope this clears up my thoughts. I'd throw in more than my 2 cents, but that's 10% of another share of WDDD, so I'd be foolish to be tossing aside pennies at this juncture! :)
@postyle,
The impetus for this thread may have been, in your view, to discuss the merits of a $1B+ settlement, but to me that was never my interest when I jumped into this thread.
Any discussion about whether VRNG will be the first company to extract a $1B settlement would be a very short discussion indeed, and I don't think anyone outside of Kevin Porter really believes that this lofty settlement number is feasible (and whether he REALLY believes it himself is something no one but Kevin knows).
What you view as annoying questions that digress from the topic of $1B settlement are questions tackling the larger scope of valuation in general, since as we both know there is very little of substance that could be discussed re: a $1B settlement anyways.
For those who have been reading your posts since the 1990's, well they may have an idea of how you go about valuing companies, in particular patent companies. But I don't know you from Adam and have only been reading your posts for a few months now.
And I'm sure you will concur that the valuation approach that you and flyersdh take are contrarian to what most if not all retail investors are accustomed to. As such, I am going to inquire deeply into the basis of your valuation methodology no different than I would question anyone else's if they were to say the same thing you did:
That they feel that the current sp of $3.20 already has an anticipated future award of 3.5% of 20.9% baked in (which would translate to a future monetary award of ~$500M), but at the same time state that a settlement of only $75-$100M will propel the sp into the $4's.
To me, statements/opinions like the above are begging to be inquired about for no other reason than the fact that on the surface, they initially look/sound odd and potentially appear conflicting. Not saying you are making conflicting statements, not at all, but simply saying that they appear to be conflicting and therefore warrant further investigation.