Newbie who is has been in the Vringo saga also has a position in WDDD and he spells out the wide range in potential settlements WDDD may get on a Vringo message board.
"Several people have performed back-of-the-napkin calcs on potential damages. In fact, EDVA, princetonATTY44, and myself have all come up with ~$500M -- but the kicker is that we all used different assumptions, so I would venture to say that it was simply coincidence that led us each to arrive at this $500M number.
And that is precisely the obstacle we face at this point in time: Not simply a news vacuum, but an entire vacuum of any type of info at all. But this is simply par for the course when a company is still months away from a Markman hearing.
Until the claims construction is hammered out, no one -- not even Kidrin -- has any clue what the scope of infringing products and related damages will be.
But, all the key metrics are already available for you (anyone, really) to begin calculating low and high ends. But you will find that the gap in between is so vast that it is truly unhelpful at best. For example:
For the Royalty Base, you can be conservative and say that it will only apply to the COD/WOW titles. Based on historical numbers, these 2 titles comprised ~52% of ATVI's ~$4B of annual revenues. For the high-end, you can assume that the claims construction will permit a broad enough definition that all of ATVI's titles will be deemed infringing, therefore all $4B is to be used.
For the RR, there are not many comparable cases on this specific type of software, so we have no clue what a reasonable RR is. You can be conservative and apply 1.0% or aggressive and apply 5%.
For the claim on willfulness, you can be conservative and keep the RR untrebled, or you can be aggressive and treble it.
For the legal contingency, you can be conservative and assume 50%, or you can be aggressive and assume it will only be 30%.
For the O/S count, you can use the 82M currently outstanding, or you can be more conservative and use the full 100M that are authorized.
Also related to the Royalty Base, you can presume that there will be no growth over the patent life, or you can factor in a 10-15% annual growth rate.
In addition, you can assume that only ATVI's revenues will be on the table, or you can be aggressive and factor in a premium to reflect the fact that ATVI's $4B in current year revenues represents only 33% of the $12B for the MMORPG industry in total, and that WDDD will be getting a piece of the entire $12B.
Or, you can forget all of the above and simply just assume that the "smart money" that the big investors have brought to the table (and hopefully will continue to bring more to the table) is already aware that settlement is the likely outcome and have already set their own price targets based upon a settlement of $xxxM, which bears no real relationship whatsoever to any of the damages factors highlighted above!
The point to all this is simply that it is easy to compute a potential damages number, but the assumptions are still so much in flux that the potential resulting sp that results from thiese calcs will range from less than $1 all the way to $40+. All interesting to look at and think about -- but completely inactionable pieces of information.
The bottom line is that in the absence of concrete info/facts, it does not matter what YOU think the damages amount and impact on the sp will be -- it only matters what the masses of other investors believe it will be, so your best bet is to think like a TUT and try to value it the way "smart money" will value it -- and not by using the silly pie in the sky assumptions that retail investors typically use."
