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Parkervision Inc. Message Board

  • bjingles bjingles Jan 2, 2013 7:09 PM Flag

    Valuation of a patent license company

    I, for one, continue to be entertained by all the price speculation. Do any of you longs ever research the market or do a little basic math?

    Lets assume for this thread that PRKR experiences the good fortune of getting past all the "IF’s" like IF the technology has benefits, IF the patents are valid, IF QCOM actually uses it. Etc.Etc.

    As I see it, if PRKR were to succeed at patent licensing, they will be valued by the market in a manner similar to others doing the same. The best example I am aware of is Interdigital Communications (IDCC).

    IDCC’s entire business is licensing patents mostly to the cell phone industry. I believe it to be correct that every cellphone made has some amount of intellectual property traceable to an IDCC license.

    The patent are sound and court-tested. Year after year, they bring in hundreds of millions in revenue. In the last 4 reported quarters they show $652M revenue with $280M profit. Very Nice.

    If PRKR succeeds with their litigation, they become "IDCC like". Ultimately, it’s reasonable to expect the marketplace to value them in a similar manner. Raising the question: "How much is PRKR worth as a percentage of IDCC?"

    For some guidance, here’s a quote from the IDCC site:

    "InterDigital’s research and development efforts address the core functionalities of wireless. As a result, our know-how and inventions reach across the wireless ecosystem, from device manufacturers to infrastructure providers and operators. Extend that reach over decades of development and the result is one of the most impressive patent portfolios in the industry: close to 20,000 U.S. and foreign issued patents and patent applications (as of June 30, 2012). And our team of close to 200 engineers continues to develop new technologies and find new solutions to issues, adding more than 1,000 worldwide patents and applications to our portfolio every year.

    Beyond technology development, InterDigital is proud of our business practices. We have a comprehensive program of developing and protecting our intellectual property, and our licensing practices are considered exemplary by licensing and industry experts. The company is also a founding member of the Innovation Alliance - a coalition of entrepreneurial companies seeking to enhance America’s innovation environment by improving the quality of patents granted and protecting the integrity of the U.S. patent system."

    Let’s compare IDCC and PRKR:
    IDCC 20,000 patents, PRKR about 200 patents (About 1%) (Yikes, somebody call the Patent Board!)

    IDCC 1000 patents per year. PRKR, a couple (10-15?)

    IDCC 200 research engineers, PRKR a couple (5-10?).

    PRKR claims their patents allow somewhat better efficiency and performance for a phone. A “nice to have” story. IDCC is in the position that their patents are ESSENTIAL to building a modern cell phone.

    So, pick a percentage for PRKR compared to IDCC, multiply by the market cap of IDCC, and divide by the number of PRKR shares anticipated a year or two in the future (90 to 100 million)

    I would submit that a reasonable percentage might fall between 1 and 10% Just my opinion based on the number of patents and the relative success levels. But, you can make your own pick and predict the future price.

    Have fun with that.

    Happy Holidays and the opinions are my own

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    • Wow, If you listen to the long viewpoint here, PRKR has already won the case. Everybody mortgage the house and go buy some more PRKR! It must be impossible to lose. Such a deal!

      Here are a few observations from the last week or so…

      Based on what is posted, I gather that the QCOM lead attorney called Sorrells and the PRKR patent team "liars". Here’s something I find interesting about that: If one person calls another a liar, at least one of them is a liar. Which side has the liar? Would an experienced attorney make such a statement in open federal court if he did not have solid evidence to back it up? Time will tell.

      Papers about radio propagation in rain forests may appear in distinguished publications. So what? That does not mean that they apply to designs for transmitter and receiver circuits any more than a corporate org announcement does?

      Longprkr whines on and on that the shorts attention to history is irrelevant in his opinion. I wish he could track the history of his own posts and notice how often he repeats himself. It’s like a carnival barker.

      I recently saw a movie about history that I highly recommend. "Lincoln". It will be interesting to see how it does at the Academy Awards.

      You can choose to ignore history, its teachings about the character of those involved, and the rest. You can ignore it all, except for one thing: That history is why there are over eighty million shares to dilute any positive outcome. That impact will not go away.

      Before the lawsuit, this stock was spending its time well below a dollar. Now we are 3-5x that. So, the market has already added a substantial award value into the price. The further increase for a favorable judgment may not be that great, which is why I pointed out the market comparison with IDCC in my last post. Not one of you longs offered any justification ranking PRKR as a percentage of IDCC and the related price impact. Don’t worry, if the time comes, the market will do it for you.

      Some suggest that an award could reflect directly in PRKR stock price. You should think that out a bit. First, McKool probably gets 25 to 40% off the top. Then, consider the PRKR bonus program that pays six-figures-plus amounts while the company bleeds red ink. A bunch of cash will probably will go down that path. Then, there will be the offsite conference where the executives and board convene in Tahiti or Bangkok to discuss how they should properly "invest" what’s left. Company executive jet, anyone?

      Now, there is lots of talk about the often-predicted-but-never-realized upcoming short squeeze. How did the short interest increase from six to sixteen million shares (which is still less than 20%). How? As I see it, a plausible explanation is that a large portion of that represents "shorts against the box". These are shares where the controlling interest has offsetting long shares as part of a tax strategy. One of those loopholes that the government has attempted to close without complete success. It will be interesting to see what happens before and after the Jan 30 cutoff in the tax law….at least for those that the law applies to.

      I offer a "tip of the hat" to trublvrprkr as the only long who seems to be trying to figure things out and look at both sides. Your comment of 10 Jan 2013 " …what do Qualcomm and their lawyers have to gain with this kind of behavior? I keep recurring to the idea that Qualcomm may believe that their number one ally in this case is time. Perhaps they are baiting the judge into an immoderate response that might form the basis of some eventual appeal, if things don't go their way." is very interesting.

      After all, the judge is relatively new to the bench and might be more prone to make a mistake. If he does, QCOM could go into trial knowing that they either "win" or "don’t lose because that have a solid appeal path". That puts McKool into a "can lose" or "can’t really win" position for the first trial. While the rest may argue legal etiquette and pushing rules to the edge, perhaps Mr. Hummel deserves more credit that you think.

      Regarding Markman…I see it largely as a "don’t care". It will help direct QCOM down one of two paths for either non-infringement or invalidation. I think they stand a good chance of winning either for reasons I have previously posted.

      As always, the opinions are my own. Keep on pumping. The greater fool theory seems essential to PRKR success. Whatever you do, do not go to Google and search out the terms parkervision and fraud.

      As always, the opinions are my own.

      • 3 Replies to bjingles
      • BJ - While calling lawyers liars may have broad appeal to laymen, I think what urspond said was that the "PRKR patent team" - as you call them - included skg attorneys that day. This Judge has already issued a rule 11 warning (or 2) specifically about un-civil, un-supported accusations against lawyers in general and SKG in particular. It would be good if urspond could clarify for everyone's sake, but if I'm correct, Hummel would seem to be on thin ice

        BJ:
        )I gather that the QCOM lead attorney called Sorrells and the PRKR patent team "liars". Here’s something I find interesting about that: If one person calls another a liar, at least one of them is a liar. Which side has the liar? Would an experienced attorney make such a statement in open federal court if he did not have solid evidence to back it up? Time will tell.

      • bjingles - You raise a number of legitimate points. My thoughts are as follows:

        - I still can't believe that Hummel called the other lawyers "liars" in open court. This is the precisely the type of conduct condemned in the Therasense and other cases. Thing is - he doesn't have the goods. It's just like when he argued so hard on the Sterne motion. Sounded good until the judge rather dismissively tossed it. This one is different though - and there will be repercusions - you don't slander reputable counsel in open court unless you have overwhelming proof. I still think this personal animus is coming on direct orders from Q management - probably Jacobs himself.

        -The patent application included a bunch of junk to forestall later claims that somehow PV missed something in its application - done all the time.

        - I don't see the basis for a comparison to IDCC until we see the numbers. The analysis is different - 1) did Q infringe? 2) in what products and how much money was made 3) what is a reasonable royalty and 4) what about royalties going forward? This information has not been disclosed but there are comments dropped here and there that are interesting. Hummel says that PV claims Q has infringed with "billions and billions" of chips. We have the offer of $678 million in 1999 which may provide some sort of base. Jacobs stated in the Forbes article that every Apple Iphone contaisn$23.50 worth of Qualcomm's chips.

        - I figure McKool's contingency is 20% Any more and it would be a full contingency. And BTW I think that came from PV, not McKool. Parker did not want to give away 40% And yes, there will be bonuses and all that if there is a recovery - but there are a lot a shareholders out there that would band together and throw him and his crew out if he tries to ruin a setlement. There's a lot of cranky shareholders who trust Parker less than the market. I for one would start a shareholders suit in a second if Jeff Parker and crew tried to fool around with the money

        - On the shorts, I thought "shorting against the box" was pretty much eliminated as a tax dodge by the 1997 Tax Act.

        This judge may be new to being a judge, but he is not new to being a trial lawyer. I am very impressed with both his judicial demeanor and the tenor of the rulings he has made to date. Same thing for Magistrate Morris. So far there is no reversible error, and I don't see him doing so. Anyone who undersestimates him is in for a rude awakening.

        - As to the Markman, the sole purpose of Hummel is to try to limit what PV can say to the jury. PV has not requested that one limitation be imported into the claims construction at the Markman. Normally a patent holder will try to do that to avoid an invalidity defense. Hummel has requested that numerous limitations be imported from extrinsic evidence. For example, if he wins on the negligible aperture argument, Parkervision is essentially thrown out of Court. Normally a defendant is seeking to import an extrinsic limitation to avoid an infringement contention. Hummel wins at the Markman only if the Judge construes terms in such a way that he throws PV out of court.

        Whatever happens, I think Judge Dalton will let the parties try their case to the jury.Q simply can't let that happen.

        None of this means that anyone knows what the quantum of damages could be in this case. The information is simply not public yet. However, I think it will be substantial. And everyone seems to forget that if there is a judgment/settlement, there will have to be something for future royalties

        One last question. I have been hearing for months about all this prior art that kills PV. This case is now a year and a half old. Wouldn't you think that by now Hummel would have produced at least one specific piece of prior art that anticipates PV's patents? I mean - why not say - here ,judge , is Patent 1234 that does exactly what Parkervision says it does, and it was earlier than PV's patents."? Why no specifics? Why does Prucnal say that PV invented an entirely new method of downconverting? Was he unaware of the prior art in this area? Where's the beef?

        Sentiment: Strong Buy

      • bjingles:

        Shareholders and short-sellers can win and lose long before there is a definitive outcome for the parties. They may do so several times.

    • Your common sense, logic, and grade 3 math have no place here. All that matters is McKool shoving this or that down someone's this or that and mopping the floor with someone or other in front of 12 slack-jawed bumpkins that always bet on the little guy.

      I love the argument of the touts along the lines of "all you shorts have to talk about is the horrible business, the lack of customers, zero revenue, millions in cash burn per quarter, the mystery VIA OEM that just can't seem to want to do anything, the years of failure and broken promises, the worst management team in the history of tech, the bush league credentials of the technology staff, the hoodwinked PTO, and the perpetual dilution machine".

      Yeah, time to go long as "this time is different".

      LOL.

      Sentiment: Sell

      • 2 Replies to bonkthegrups
      • Nah- Bonk- you got it wrong. You make it sound as if this lawsuit is one big fraud. Any fair reading of the pleadings and the transcripts of the hearings in this case would show that such a conclusion is just wrong. First, I note that this is apparently the only patent infringement suit PV has ever filed, and so it does not appear to be an ongoing business tactic.

        It also appears quite clear that Sterne, Fox, which prosecuted the patents-in-suit, and has also prosecuted over 50 of Q's patents, conducted a pre-suit analysis, which also included some very expensive reverse-engineeering of a least one Q chipset, and determined that there was a basis for the infringement suit. Parenthetically, in its inequitable conduct claim, Q is also accusing Sterne, Fox of perpetrating a fraud on the Patent Office in securing the patents-in-suit - a serious allegation against a firm that does nothing but IP work and that is subject to discipline. The claim is bogus. I predict that after the oral argument next week, Judge Dalton will dismiss Q's inequitable conduct claim just as he has dismissed its suit against Sterne. Q is also going to lose on its refusal to answer Interrogatories 21-25. These are essentially bad faith claims that I think has destroyed Q's credibility with the judge.

        In addition, the McKool Smith firm spent over 100 hours of legal time reviewing the patents, the prosecution history, the facts supporting infringement and all the other facts. After that review, McKool agreed to accept the case on a partial contingency basis. This firm specializes in this type of litigation, and would not have taken this case unless it was convinced that it was going to win. It has dedicated substantal resources to this suit - I count almost 20 of its attorneys are working on this case, including those with Ph.D's in electrical engineering, Moreover, one of its best litigating partners, Doug Cawley, is lead counsel on this case, and has obviously spent an enormous amount of time on this case. These guys are no fools, and have taken on the likes of Microsoft and won. They don't need the work, and so the fact that they accepted the case is an important factor in my evaluation.

        Moreover, in the Markman briefing and argument during the Markman hearing, it is clear that Q is basing its defense on invalidity, and not non-infringement. As long as Dalton does not decide the Markman in a manner that essentially throws PV out of Court on invalidity, this case goes to the jury - which Q can't permit. From the argument and the Court's comments, I think that PV clearly will win on the N=1, substantial distortion and some other claims. I don't believe that he is going to hurt PV on the remainder.

        There are a number of other factors, including the opinions of a world-class expert in Professor Prucnal, that weigh in favor of a probability that PV will win at trial.

        The only unanswered question is the amount of damages- and as to that I think we are all shooting in the dark. We don't know what the numbers are - what Q's responses to interrogatories are about the number of relevant chips or chipsets that have been sold in past years, the price, the cost, the profit margins, etc. for these chips. I know from Q's annual reports that they have sold hundreds of millions of chips and chipsets annually. In the Forbes article, it was stated that every Apple Iphone contains $23.50 worth of Q's chips.I don'y know if it is claimed that those chips infringe PV's patents. Until these numbers are disclosed, we really don't know what the quantum of damages are, and what a reasonable royalty going forward would be. However, it appears to be substantial - and any damage award should clearly be trebled for intentional infringement.

        In light of all of this, any suggestion that this suit is bogus simply ignores the facts. This does not mean that it is guaranteed that PV will prevail. However, I think there is a substantial liklihood of a favorable verdict - which is why I have bought this stock.

        Sentiment: Strong Buy

      • Bonk, so how dense can you really be? I mean truly, what freaking part of this can you not understand. Overbrook and I are here for the patent infringement case. PEROID. What is your disconnect on this? Is this so far outside of your ability to experience - this represents some kind of foreign language to you? There is a HUGE upside to being long with the federal court case coming up. We believe, PRKR stands a better than even chance - a much better than even chance, of wining this patent infringement case. You act like some indigenous native who sets down their bow and arrow to look clueless down the barrel of a gun.

        Or, are you dumb like a fox and know the Infringement case doesn't look good for shorts and Qcomm so you need to work overtime, even to the point of coming off "just plain stupid" (JPS) - to suppress or invalidate the strategy of being long just for a patent infringement case.

        Which is it? JPS or dumb-like-a-fox? From that "take me to your leader" post above, I can't figure it out. Bonk the Martian. Do you only invest long on a company's business model on Mars? We're Earthlings Bonk. We can have different strategies on this planet.

        Sentiment: Buy

 
PRKR
3.30-0.14(-4.07%)Jun 29 4:00 PMEDT