Chas, good post as always.
A couple things I have focused on is, there is a reason why Lexington wanted to merge with DSS. We are all focused right now patents as the big growth area, but Lexington (who had all the cash and financing contacts) did not need DSS to expand that area, which tells me that there is value yet to be unlocked in the DSS core products which we can not forget, as you point out.
On Novell, while any settlement will add value to the company's financials, the market trades on expectations. In this case though, as current stock price, the Lexington patents are being assigned virtually no value which is lunacy and honestly I believe just a short term trend. The settlement with Novell shows unequivocally that the patents have real teeth, yet with that said I think we will see a 4%-5% RR in the disclosure, because the biggest fish are still in the pond and DSS is well capitalized and does not need to take less than a fair rate just to get cash in the door. Since Novell has been privatized it is tough to discern what a 4% - 5% RR would exactly equate to, but it will certainly be their largest revenue stream.
Overall, for some reason the investing market has still not caught on to DSS. When you hear and read articles about IP plays like Virnet, Vringo, Worlds and other, DSS is never mentioned. On the other hand, it does not get much attention for its product side of the business either. It is DSS management's job to change this and keep pushing the company's prospects into the light of the market.
With the Markman a few months away (as least at this point), we should see volume starting to grow and valuation increase. With that said, it is prudent to sell some stock when the price run up overextends, just as it is to buy when it is well oversold. If you can take a longer term look though, over the next few years, DSS is setting up to become not only a strong patent stock, but a well rounded company with real products on the encryption side that has been under developed and not managed well. Further, these 5 defendants are likely far from the only companies that DSS will pursue litigation against for infringement and 3 settlements before even the Markman hearing may well bring more quick settlements in future cases.
I believe the new management has a strong plan and the Novell settlement was step 1 of many. If you do not believe this, sell the stock and move on to a company you do believe in. Otherwise, realize that market pressures as we have seen over the last month in DSS do not last, MM's in the end can't hold a stock down and neither can 1 or 2 sellers of any size...eventually the stock price will move to correct fundamental value, and we are not really close to that right now.
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