Tuesday, 10 November 2015

Unwired Planet: in orbit -- or heading out to space?

Los Altos, CA based Unwired Planet, Inc. has just announced its financial results for the first quarter of fiscal year 2016. The figures are in negative territory: revenue to 30 September was US$1.3 million, while loss from continuing operations totalled US$10.2 million. This deficit sparked an upbeat response from company president and CEO Boris Teksler:
“We have been working tirelessly on a strategy to reinvigorate Unwired Planet with financial stability, while executing on our IP licensing business. With the addition of a new CFO and new board members, we are assembling a team with the financial acumen to develop and execute on the next chapter of Unwired Planet”.
This begs the question: is what is needed a dose of financial acumen or an injection of intellectual property strategy?

Unwired Planet holds a portfolio of some 2,500 patents -- though this number includes both granted and pending US and foreign patents and stretches across 2G, 3G and 4G technologies. This portfolio, which comes mainly from Ericsson, includes patents pointing to technologies that let mobile devices connect to the internet and enable mobile communications.

Wikipedia gives a brief bio of the company, whose roots go back to Libris Inc. in 1996 and which in turn has traded as software.com, phone.com and more recently Openwave -- a name that is associated with the introduction of the Mobile Internet. In its relatively short life the business has done, and been, many things. Of late, with 16 employees and no products, it has been accused of being a patent troll. However, the company resists the charge. According to Bloomberg, citing Unwired Planet general counsel Noah Mesel:
“It’s become a hackneyed term that’s used in a derogatory way.  You can call us anything you like.  We happen to be at the point in our business cycle where what’s left is a patent portfolio".
So what are the company's prospects? Much depends on the outcome of pending patent infringement litigation.  An action against Apple in the Northern District of California appears to have hit the buffers this May, but major actions are pending in Europe: Samsung, Huawei and Google are being pursued by the company's Irish subsidiary in Germany and the United Kingdom, and HTC is being sued in Germany too.  In the UK the litigation has already established the principle that infringement disputes involving FRAND licence terms are not amenable to summary judgment and have to go to full trial.  It may be a long, long time before the outcome of this litigation is known, at least in the UK where earlier this month Samsung was granted leave to appeal to the Court of Appeal for England and Wales against the trial judge's decision to strike out part of its defence.

So what happens next?  Will Unwired Planet be able to subsist with an operating loss eating into its cash mountain (with total assets slipping from US$ 88 million to US$ 80 million between 30 June and 30 September) until such time as licensing income and court-awarded damages help it turn the corner?  Will even a successful litigation outcome be enough to save it?

This question cries out for an exercise in patent analytics in order to tease out the information needed to address it. For example: 

  • in precisely which fields of technology does the company's patent strength lie?
  • how many of those patents are standard-essential and how many compete with those which are already recognised as standard-essential?
  • are FRAND licensing arrangements in place and, if so, have they been judicially upheld?
  • how are those patents spread between jurisdictions that award punitive or large damages and between those where damages are low or purely compensatory?
  • how are those patents distributed across those fields?
  • how old is the portfolio in comparison to the patent holdings of competitors and what are the prospects for augmenting it through organic growth or purchase?

With the relevant information, the decision whether to fight on or change tack becomes easier to make.

5 comments:

  1. Last week Unwired Planet was given an averaged "strong buy" rating by two analysts http://www.dakotafinancialnews.com/zacks-analysts-give-average-rating-of-strong-buy-to-unwired-planet-nasdaqupip/592951/ . Does anyone know what the analysts were actually analyzing?

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  2. Anonymous @22.13 The answer is easy. Unwired Planet has a cash pile and its current stock price is far closer to its low for the year than to its high. You don't need to know anything about the company or its stock. All you need to do is to guess that the current price is a deviation from the norm and that everytihing will be all right.

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  3. Thanks for this post.

    The corporate history as indicated on the wikipedia link suggests that the company in its various iterations over the past 20 yrs has chosen to respond in a highly focused manner to immediate opportunities rather than to develop a long term strategy. This obviouslyt worked when the technology was at an early stage and not conducive to a longer view. This doesn't seem to work now though and what there is, is a business that is more interesting for the money and intangible assets it has, not for anything it appears to be trying to do,

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  4. A thought. If UP is really short-termist in its strategy, won't the amount of money it has be a better indicator of likely success than its IP portfolio?

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  5. What's happening to Unwired Planet's stock price today? UK patent court rules UP patent valid and infringed by big purse-holders Google, Huawei and Samsung.

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