Motorola should cash in its valuable wireless patents, says Carl Icahn
Billionaire activist investor Carl Icahn thinks Motorola Mobility might be sitting on a goldmine with its wireless patent portfolio, and thinks the mobile communications company should perhaps begin shopping them around.
In an amended schedule 13D Icahn filed with the SEC today, the investor's beliefs were clearly laid out:
"On July 20th and 21st, 2011, [Icahn] discussed with [Motorola Mobility] his view that [Motorola] should explore alternatives regarding its patent portfolio to enhance shareholder value. [Icahn] believes that [Motorola's] patent portfolio, which is substantially larger than Nortel Networks' and includes numerous patents concerning 4G technologies, has significant value. In addition, there may be multiple ways to realize such value given the current heightened market demand for intellectual property in the mobile telecommunications industry. [Icahn] intends to have further discussions with [Motorola]."
Motorola indeed has a lot of valuable patents in the mobile wireless space, many of which have been used in licensing and litigation with companies such as Apple and Research in Motion. Even after Motorola sold off its valuable wireless network infrastructure business to Nokia-Siemens for $1.2 Billion last year to help streamline Motorola Inc. as it split into two new companies, it retained nearly all of its wireless intellectual property.
Regarding the discussions with Icahn, Motorola issued a statement which said the company is doing just fine with the patents under its arm, but it is always open to strategy shifts if they are required.
"Since Motorola Mobility became a new, independent public company in the first quarter of 2011, it has delivered innovative products and solid growth, including 22% revenue growth during its first quarter. Motorola Mobility has achieved these results, in part due to the fact that it has one of the strongest and most respected patent portfolios in the industry with over 17,000 patents and 7,500 pending," the company's statement said.
Icahn's point about the heightened market demand for wireless telecommunications patents, however, is sound. Defunct Canadian telecommunications company Nortel auctioned off its 6,000 wireless patents for $4.5 billion at the beginning of July, based on a stalking horse bid of $900 million. Motorola could auction off just a fraction of its portfolio and earn that much.
The total value of the company's portfolio, however, remains undefined.