Andrew:
You will get a lot of crazy answers to your question. For me, the only true measure of a business' worth is discounted cash flow - a calculation of the value (cash) generated by the company over a period of time which has been adjusted for the time value of money. To get a start on the math, look at analysts who have used this method. I think it was Marsala who did in his old reports. You can update his numbers based upon what you believe will happen in the future; put in any amount of revenue from the big four infringers, adjust the expenses for reduction in legal costs, etc. Any increased revenue from products would be a bonus, but partially offset by increased expenses. Don't forget the taxman. Go out 5-7 years; after that the discount is so great as to not matter. A discount rate of 12% to 15% is reasonable.
Once put on a spreadsheet, you can update the numbers as we go along signing licenses, selling product etc. What discouraged me from doing this is the lack of real hard facts about licensing revenue (see the four day discussion on Apple). Thus, projecting future annual revenue becomes extremely difficult - just what professional analysts and our on-board analysts have been complaining about. Without a reasonably accurate top line number, all else becomes nonsense. Thus the reason why you will get a lot of crazy answers.
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AI
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