Nortel Networks (fka NRTLQ)

[hawkmd]

Intel and Apple jump into Nortel patent fracas
Commentary: With Google in at $900 million, bids will go way north

BERKELEY, Calif. (MarketWatch) — In Friday’s news, I find that Intel Corp. now has approval from the Justice Department to bid on the pot of 6,000-plus patents held by moribund Nortel Networks Corp., a company that in the late 1990s was soaring.

Minutes later, Apple Inc. got the OK to jump in too.This could be the auction of the century.

Apple AAPL and Intel INTC join Google Inc. GOOG , Ericsson ERIC and Research In Motion Ltd. RIMM as the most publicized bidders interested in the patents. I assume any number of companies might show up for the final bidding, which starts Monday. Nokia Corp. NOK should be in on the action, but may be strapped for cash after throwing in with Microsoft Corp. MSFT. The patents are devoted to most things wireless, including LTE, WiFi and certain kinds of social-networking interactivity. Google already has bid a preemptive $900 million to see if it can stymie some of the competition.With Google in at $900 million before the Apple and Intel approvals, you can be sure these patents will go for way north of $1 billion. If someone already knows about some key patents that could be useful for all sorts of leverage, I would not be shocked if the package was sold for more than $3 billion.

Once you get that high, a new possibility comes into play — a side bet, if you will.Nortel’s stock NRTLQ is sitting (as this is written) at 5 cents. The company has just more than $3 billion in debt. The stock could become a 10-bagger instantly if the auction goes crazy. Speculators, take note.
Then again, at 5 cents the auction already may be factored in. Grim.The beneficiaries will be the winners of the patents. There must be some gems in there. During Nortel’s heyday, I was fortunate enough to follow the company closely. It had developed one of the most modern and forwarding-thinking strategies, and yet was thwarted by the dot-com crash of 2000.Nortel never recovered, but its patents and basic ideas are still in play.
The company’s basic concept was that at some point in the future, the WAN or wide-area networks, such as the Internet itself, would be so fast that the LAN or local-area network would disappear, because it could not keep up with the extraordinary speeds of the WAN.

This new reality would change the way everything is done. At that point, the vision gets murky. It was a very radical idea, and apparently still is. But the patents that went into that idea (and other futuristic concepts) are sitting among the 6,000 to be auctioned.

It’s hard to say which company would benefit the most from the intellectual property. I’m of the opinion that Intel would offer the best stewardship, because it may have the broadest base of engineering talent to understand and commercialize more of the patents than other companies.

Ericsson is the other name that’s a good fit, since it is in almost the same business as Nortel. It seems natural.

But Ericsson has the disadvantage of being from a cultural background not known for splurging, and will easily be outbid by just about all the other firms. However, I will not count the Swedes out yet.

RIM and Apple obviously would glom on to the wireless patents to improve their handset offerings and gain an edge in the competitive marketplace. It’s possible that they would then spin off the other nonessential patents to recoup costs.

We do not know who else may show up for the patent auction, including some of the patent-troll operations that would buy what they could in hopes of creating a pool of expensive licensing deals.

I’m looking forward to seeing the bidders’ list if it’s made available. These will be the companies that will be the most affected by the results of the auction.

Look for a bidding war on Monday.

http://www.marketwatch.com/story/intel-and-apple-jump-into-nortel-patent-fracas-2011-06-24?siteid=yhoof