XpresSpa Group Inc (XSPA)

[coolerheadsprevail]

I think it's priced in that goog says they don't owe anything.

LOL. That would be great if that were the case, since that would mean that every dollar of whatever award ultimately gets announced by HJJ will be directly accretive to the sp!

But, sadly, we know that is and will not be the case.

It is quite evident that the market is pricing in quite a bit of the 3.5% of 20.9% scenario, but with the expected discount for uncertainty and timing.

Just look at it this way:

Based on the 10-Q, they have .49/share worth of cash on hand.
The BV of the NOK patent portfolio is about .19/share.
Without even accounting for anything else (i.e. any NOL on the books if any, any other assets on the books, etc), this comes to .68/share by itself.

So with a current sp of ~$2.90, this means that the market is attributing $2.22/share value to SOMETHING.

If I recall correctly, the estimates for a 3.5% of 20.9% ruling came out to ~$600M. Take away 20% for legal contingencies and then 35% for taxes and you get ~$312M. Using ~115 FD shares gets you $2.71/share. Discount this $2.71 for both uncertainty (as the award is not yet final) and time (since any award that is finalized would NOT be paid all at once upfront but would be spread out over future periods up thru 2Q16), and one could argue that the present value that the market is attributing to a 3.5% of 20.9% is actually less than $2.00/share.

But as we see above, the market is attributing $2.22/share to SOMETHING, right? Well, IMO the rest of the current sp that is not already attributable to other things (i.e. BV of Cash; BV of NOK patents; and Discounted value of 3.5% of 20.9% for GOOG award) is related to a speculative "pricing in" of a very modest amount for anticipated resolution to MSFT and ZTE.

But to circle back to the premise of this discussion: One could logically argue that once HJJ rules officially for a 3.5% of 20.9% award, the $2.71/share becomes more fully realized (i.e. the discount for uncertainty decreases quite a bit, but will still exist due to the lack of finality related to the appeal; but the time discount will still be here). From a pure BV perspective, even if you strip away all the discounts related to uncertainty and time, the $2.71/share related to the GOOG award + the .68/share related to Cash/NOK patents gets you to $3.39/share.

The great unknown variables that no one can predict will be how much value the market will assign to: (1) speculation related to the MSFT suit; (2) speculation related to the various ZTE suits; (3) speculation as to future value that can be unlocked from other NOK patents outside of the ZTE suits; and (4) any other premium to award to VRNG. There will surely be a healthy dose of speculative "baking in" of these items, but without any of it, the numbers would seem to point to an estimated BV of $3.39/share if HJJ awards 3.5% of 20.9%.

JMO, though, so take it FWIW...