Monday, 25 July 2016

Verizon takes the cake: Excalibur is left with the crumbs

Yahoo, in happier days ...
News today is that much of the tastiest bit of what the BBC calls "faded internet star" Yahoo has been gobbled up by US telecoms giant Verizon. You can read the headlines on Reuters, Bloomberg and on technology news channel TechCrunch here.

This blogpost looks at one small item relating to this deal: a chunk of the cake that was left on the plate when the rest of Yahoo got swallowed. Writes TechCrunch:
"As of today, the business that will stay behind post-acquisition by Verizon includes Yahoo’s cash, its shares in Alibaba and Yahoo Japan, Yahoo’s convertible notes, certain minority investments, and Yahoo’s non-core patents (called the Excalibur portfolio) [there are around 4,000 of these, for which Business Insider talked up a much-criticised US$ 3 billion price tag, discussed here in "The Yahoo patent portfolio: what price a reasonable valuation?"].

IP that is connected specifically to Yahoo’s core assets will be part of the Verizon acquisition, and Yahoo is still looking for a separate deal for the patents that are in the Excalibur portfolio. That portfolio is estimated at upwards of $1 billion by Yahoo [for more on Excalibur and what was hoped of it see "Fireworks or fire sale? Getting a grip on Excalibur", here].

There are around 4,000 patents, both issued and applications for pending patents, as part of Excalibur, Yahoo said today, but the implication was that they were not getting the kinds of offers that it had hoped to get. “We didn’t want this to be an afterthought to the rest of the assets,” chair of the strategic review committee, Tom McInerney, said in a conference call today. It also sounds like there is an option either to continue trying to sell them, or perhaps license them directly, which is already the case with some of these patents, McInerney said today".
The suggestion has been made that the Excalibur package was not a fire-sale, that its patents and applications were of core importance and that there was concern that the Excalibur portfolio might fall into the hands of a rent-seeking purchaser [see Backchannel here].  To date, however, there does not appear to have been a rush to form a queue outside the company's door in order to place a plausible bid. There may be many reasons for this. Possible purchasers, forgetting the value of IP analytics, might be ploughing through the laborious task of manually assessing the distribution, footfall and duration of these geographically limited and time-sensitive assets.  Or they they may be indulging in a Dutch auction, waiting for the price to fall below the floor. Or the patents collectively may not add up to a sufficiently manageable and exploitable package to make acquisition worthwhile. 

Whatever the reason, the price at which the purchase of these potentially powerful but depreciating assets might be worthwhile remains the subject to the vagaries of expectation and speculation, leading to hesitation and subsequent re-evaluation. It is a shame that this should be the case. Tools exist for a more scientific approach to the assessment and pricing of patent portfolios. They should be used.

No comments:

Post a Comment