Likely effect of business deal of MGT with Munich Innovation Group.
The recent move of MGT Capital Investment Limited (NASDAQ:MGT) to retain Munich Innovation Group (to license or sell MGT’s portfolio of international medical imaging patents associated with its wholly-owned legacy subsidiary, Medicsight,Inc), has been considered as an affirmative initiative of the company. The above divestiture of Medicsight patents would conclude MGT’s plan to rationalize this subsidy, as stated by MGT’s Chief Financial Officer Robert Traversa.
The company management foresees a comparative advantage with the above divestment. According to MGT’s President and Chief Executive Officer Robert Ladd, "After review, we have determined that these imaging patents do not fit with MGT's current business model. By partnering with Munich Innovation, a leading service provider for intellectual property monetization, we can better focus on the gaming patent infringement suit we filed in November 2012, as well as continuing to explore avenues to create and enhance shareholder value."
From the statement of Robert Ladd, one simple question arises, which needs to be answered. Why these imaging patents do not fit with MGT’s current business model? The question is simple but as we seeking answer we may analysis it neutrally. The main reason of not to fit of the imaging patents is that MGT’s current business model might have changed from earlier stages. It is likely that the company has fit new business model for best suits with current business world, which is beyond the extent of old one. Changing old one means adopting innovative one, this may impact on its operating result. What type of business impact is likely to happen? Will it impact on revenue generation capacity of the company? Robert Ladd also hints that the above decision of MGT may explore avenues to create and enhance shareholder value. How will it happen? Shareholders value can be enhanced by wealth maximization, which is subject to satisfactory operating result. Is MGT going to generate more revenue and positive net profit within short period? Let us wait and observe.