Thursday 26 July 2012
AOL posts profit based on Microsoft patent sale
The share price of that old dinosaur of the Internet, AOL, has recently reached levels which haven't been seen for a number of years. The sale of a large proportion of its patent portfolio to Microsoft earlier in the year lead to a major increase in its share price as can be seen by its share price. AOL reported its second quarter earnings a few days ago and the brightest spot was the USD 1.056 billion (milliard) transaction with Microsoft for the sale of the patents (and licence for the rest of the portfolio). This is being returned to AOL's long-suffering shareholders in the form of a Dutch tender in which they will be invited sell their shares back to the company. Intriguingly Microsoft then sold a large proportion of the portfolio onto Facebook. This was not entirely surprising since Microsoft and Facebook have been friendly for a number of years - including allowing Microsoft's Bing search engine to mine into Facebook data. The whole deal has been presented as beefing up Microsoft's patent portfolio in the search business and help Facebook's patent dispute with Yahoo. Certainly the volume of patents probably means that both companies have probably a better arsenal to defend themselves in this and future patent suits. AOL's shareholders can comfort themselves in hang realised value from a substantial IP portfolio built up over the past fifteen years.