BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB), despite declining sales in recent years, may expect higher bids than anticipated as it is sitting on a patents stockpile, which will entice a lot of potential bidders. Though the Canadian smartphone maker is struggling to survive in the fiercely competitive smartphone market, it is expecting potential bidders to be interested in its intellectual property string.
Patent portfolio may get better bids for BlackBerry
Last year, BlackBerry received a total of 986 patents, which is an increase of 49 from fiscal 2011, according to data of Intellectual Property Owners Association. The value of these patents falls somewhere between $1 billion to $3 billion depending on how many of them have been already licensed out, according to a report from Bloomberg.
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BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) got patents for a similar technology used by Apple Inc. (NASDAQ:AAPL) only a few years back, which will work in favor of the Canadian firm. However, on the other hand, the market for such assets has declined and patent buyers such as Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG) have already owned many patents for similar technologies in the previous years.
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) might get better bids than Fairfax Financials on accounts of its patent valuation. Fairfax Financial Holdings has offered $4.7 billion buyout proposal.
Raymond James analysts value the smartphone maker’s patent portfolio at about $1.6 billion while the enterprise network of servers is valued at $550 million to $1.1 billion.
Value depends on licensing
According to MDB Capital Group LLC, a Santa Monica, California-based patent-investment bank, Apple cites BlackBerry’s technology 1,295 times in its own patent applications. Apple and BlackBerry give credit to each other more than any other North American device makers. Companies need to acknowledge the rival’s competing technology to ensure that they are not claiming something already patented.
The BlackBerry patent portfolio may be valued at $2 billion to $3 billion as the technology is similar to Apple, and an average patent age is just 3.4 years, according to MDB. Value may decline if BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) has licensed out its patent, according to Erin-Michael Gill, managing director of MDB Capital, as those patents that have been licensed out to a large number of companies fetch lower value for new deals or court challenges.
Gill said that if BlackBerry has already licensed many of its patents then buyers will lose their interest in such patents as the value may fall from multibillion dollar to just a few hundred dollars.