Here's how I see it: If I were Apple, I would want all of Vringo's patents in order to kill Android.
If Apple owned all these patents, they could threaten to sue Google in search, and in turn, go after Google's search customers, if they don't abandon Android.
If you were Google, would you give up Android to protect search? Alternatively, if they were to outbid Apple for Vringo's patents, they could protect Android from such threats. Thus the value of Vringo and it's patents are roughly equal the value of Android and its future.
The value for Apple is in leverage to protect mobile from the most dangerous competitor out there.
Throw in the potential strategic value to Microsoft in these same scenarios. Buy the Vringo patents and threaten to go after Google's customers if they don't convert to Bing. Alternatively, go to court, win, and use the Lang patents to enhance Bing and to drive Google out of search with a 'cease and desist' from using the Vringo patents.
One area of disagreement: Why would Vringo settle for $7/share when a 1% settlement with Google just for past infringement is worth that much? This doesn't even include:
1) Triple damages for willful infringement
2) Potential for higher percentage settlement (1% is conservative)
3) Future revenues (worth $220 million, or about $2/share, again based on a low 1% settlement. If a 5 PE is estimated, we get another $10/share just for this)
4) The other players in the suit?
Furthermore, even if we ignore the strategic ramifications, the future revenue associated with the Nokia patents are probably worth about $5/share.
$7 a share? No way. Figure $7 minimum for a 1% Google settlement for past infringement, another $2.20/share per year for future royalties. If conservative 5 PE, we are already at $17.
Figure 10% premium for the other players and we are at $18.70.
Add $5/share for the value of the Nokia patents future revenue stream and we are at $23.70. Add a conservative 10% for all the strategic ramifications and we are at $26. Add another 10% for anything else that the patent wizards at Vringo can dream up, and we are at $28.60 ROCK BOTTOM.
Add anything else to this - including the possibilities of:
1) Treble damages for willful infringement
2) Something higher than a very conservative 1% Google infringement settlement
3) More than a conservative 5 PE for Vringo
4) Something more than $5/share for the value of Nokia patents
5) Something more than 10% for other stuff the Vringo experts can dream up
6) Something more than 10% for the other players in the lawsuit
7) Google's interest in keeping someone else's lawyers away from thier customers
8) The X factor: Strategic leverage to drive someone out of search, or Android, or both. Or for sometime like Microsoft to strengthen themselves these same markets.
9) Ego / rivalry factor. Does Google want to be seen as a patent thief? Do they want people to think 'don't be evil' really means 'don't be seen as being evil'.
10) Lack of other 'hot areas' for the major players to dive into, and the billions of dollars that MSFT, GOOG and APPL have laying around with nothing to do.
If I were Vringo, $30 is rock bottom to even start a conversation, considering the strategic ramifications and revenue potential. If even one of the factors above is much stronger than the base assumptions, it does not take long to reach $50, $70.
100-1 stock swap? TRY 10-1 and this might be too low. If I were MSFT, I'd go 1 for 2 and this might be too low.
Finally, I would note that the trading in Vringo is very odd. Look at today's Yahoo chart. Who knows what it could be. Stay long, don't be fooled by this odd trading and low estimates.
I have been quietly thinking $4b to $5b when its ALL said and done, do to the leverage that Vringo finds itself, not only with Google, but with Nokia, and the possibility of Apple, Microsoft, Samsung forcing the bid price up. A scenario of a buy out prior to trial by Google is possible. If infringment damages are paid the stock goes up, if then a bidding war begins the stock goes up again. $7.00 gets blown out of the water, no? Imagine Google paying damages, only to have Apple buy out Vringo afterwards and hence the Steve Jobs Thermonuclear hit. This would call for some mgt of options vs shares as the timeline gets crazy and or dragged outward. I have been saying The Perfect Storm is possibly building. Much speculation of course, but how do you all see it?
I honestly think that everything that you have said is correct. The 10 points you mention in the first post are each by themselves, are huge. I honestly do not know how this is not getting the attention it should be getting with only a month and a half until the trial.
The fact that Google may have been infringing on someone else's patent this whole time is crazy to think about. 97% of the money they have made for the past 14 years, infringed on. 1 Billion truly is an extremely conservative number when the calculations are done.
The fact that Ken Lang has finally waited to unload this cash cow that hes been sitting on and just waiting for the right time to pounce. From all of the research I have done, which I consider the most I have ever done on any stock. It truly does seem like all the stars and aligning and the perfect storm may be brewing.
All of that, and then they add the NOK patents with Cohen. This really is a dream team of litigators that are going to get a piece of everything, or be bought by the player who wants the control. Buying Vringo would probably cost upwards of the $30.00 floor, i agree with you on that one.
Just think about the power you would have over the other (AAPL, GOOG, MSFT). If Steve Jobs were still alive AAPL might have already paid a crazy amount for Vringo, just to destroy Google and Android. He said it was going to happen, maybe one of this last wishes was to make sure AAPL went after Google and Android.
Who knows... The possibilities are endless and all i know is im along for the ride. If i am wrong then I am wrong, life goes on. But to have done the research and truly believe that what Vringo has is a real money maker. This could be the trade/investment that comes around once in a lifetime. Not trying to pump this because anyone that talks good about it all they are doing is pumping it apparently. This is how i honestly feel.