AOL is rumored to be looking into possibly selling some of its patent portfolio Bloomberg reported earlier today. Tim Armstrong and Co. have watched their fortunes fall away since the split from Time Warner Inc. They have hired Evercore Partners to somehow bring in a cash infusion.
Starboard Value LP, an AOL shareholder, has stated they feel the patent portfolio may be valued as high as US $1 billion from licensing income. Bloomberg had this quote in their article earlier,
AOL’s portfolio includes “some of the foundation patents for the Internet,” AOL Chief Executive Officer Tim Armstrong said at a Barclays Capital conference this month.
While Yahoo recently sued Facebook over 10 patents and many people feel this is the low-road because it’s a last ditch effort to bring in some money. There is only one person I could find who agrees that Yahoo is doing the right thing.* AOL instead is possibly looking into licensing their patents.
AOL had announced in September 2011 that they had on retainer lawfirm Wachtell Lipton Rosen & Katz and the investment bank Allen & Co. after news had leaked of meetings with both. Many people have felt that AOL was looking to move to private ownership but as the ability to earn anything diminishes with each passing quarter. In Q4 2009 AOL had total revenue of US$809 million in Q4 2011 they had declined to US$576 million. Advertising revenue dropped from $471 million (Q4 2009) to $363 (Q4 2011) despite a growth year-over-year from 2010.
While the idea of licensing their patent portfolio may make Tim Armstrong giddy it remains to be seen if they will take the high road and attempt to license or take the low road and sell to any number of notorious patent trolls. It would not be the first time that a huge company starting with the letter A has chosen to work with an alleged patent troll. Apple came under fire after TechCrunch writer Jason Kincaid uncovered some interesting information
Put another way, Apple appears to have transferred its patents to the patent troll Digitude, though it first routed them through a shell company that shares the same office as Digitude’s lead investor and Chairman. Further evidence of the relationship between Apple and Digitude can be found on the ITC’s own website, where a list of files relevant to the lawsuit can be found. Many of these files are marked confidential, but it appears someone mistakenly left the file names intact. One of which is “Digitude-Apple License Agreement.”
At the end of the day we don’t know their plans at this point but we will keep you informed of any future updates.
*there’s a catch, it’s still wrong but it works for the greater good.
Source: Bloomberg
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