AOL Considering Selling Patent Portfolio - The UpStream

AOL Considering Selling Patent Portfolio

posted Sunday Mar 25, 2012 by Scott Ertz

AOL Considering Selling Patent Portfolio

Here's a story to put into the "I can't believe it" file: AOL is in financial trouble. Now, I'm not saying I cant believe it because I'm surprised AOL is having financial trouble, but because I'm surprised they are still around. Since their spin-off from the doom that was AOL Time Warner in 2009, they have seen a 29 percent drop in revenue, probably because Time Warner isn't propping them up anymore.

One way they believe they can fix this is to sell off their patent portfolio, which has over 800 active patents in it. One major AOL shareholder, Starboard Value LP, believes the portfolio could be worth over $1 billion in licensing revenue. That is probably a lot more than their 29 percent drop if you ask me.

So, who would be interested in technology that AOL has? Hit the break to find out.

Most of AOL's patents revolve around the world of online advertising and communication. That leaves 3 big players who might be interested in shelling out the estimated $1 billion price tag. Google, Microsoft and Apple, all major players in the two areas that AOL has essentially vacated over the past 2 years or so, would have the cash to spend and the interest in clobbering the other two with the newly acquired patents.

Google is most likely to be wetting their pants over the opportunity to purchase these patents. While Microsoft and Apple have had strong portfolios for decades and have been suring them lately with purchases and licensing deals, Google has been crying about how patents are bad. That is exactly the mentality I would expect from a company populated mostly by members of the entitlement generation, but not what you would expect from one of the most capitalized companies on the planet. Anyone who is more interested in whining than doing business is not someone I am going to invest in.

Google's tune has changed lately, however. Google bid semi-jokingly on Nortel's portfolio, losing to a consortium who wanted the patents to belong to all major players, including Google. If Google decides to go after this, which I think they have to at this point, they have to really go for it. No bidding Pi, or the distance between the Earth and the Sun. They need to bid with large, formidable numbers that will show that they are serious about competing. Otherwise, Microsoft and Apple will end them, quickly.


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