Worlds Inc (WDDD)

[MarkmanRunup]

Preparing for the MSJ Ruling

There are 3 ways the MSJ ruling could go:

1) Denied - Worlds can fully enforce their patents
2) Partially granted - Worlds can enforce their patents for ~3 years
3) Granted - World's patents are unenforceable

For the MSJ to be granted (#3), the court would have to break precedent. That is not going to happen as shown in Why Nothing Will Stop Worlds Going to Markman.

Since the patents will be found enforceable, Worlds will be able to target additional game publishers beyond Activision. Based on a deeper analysis of these publishers and the results of the Vringo royalty rate, I've updated my valuation analysis of WDDD.

If the MSJ is denied (#1), then Worlds will have the opportunity to go after not just future infringing revenue, but up to 6 years of previous infringing revenue. This scenario values WDDD at:



Notice that WDDD's intrinsic value is about $12.45 ± $4.39 / share!

If the MSJ is partially granted (#2), then Worlds can still go after over 3 years of infringing revenue from each publisher. This values WDDD at:



WDDD's intrinsic value is about $4.35 ± $1.50 / share!

In light of this, WDDD's current stock price looks ridiculous.