[Infowarrior] - Apple-Led Group to Buy Nortel Patents for $4.5B

[Richard Forno]

Apple-Led Group to Buy Nortel Patents for $4.5B

By Steven Church, Hugo Miller and Tim Culpan - Jul 1, 2011

http://www.bloomberg.com/news/print/2011-07-01/nortel-sells-patent-portfolio-for-4-5-billion-to-group.html

Apple Inc. (AAPL) and five bidding partners agreed to buy Nortel Networks Corp.’s remaining patents for $4.5 billion, trumping a bid from Google Inc. (GOOG) and giving them access to technologies used in mobile phones and tablet computers.

The bidding group included Microsoft Corp. (MSFT), Sony Corp. (6758) Research In Motion Ltd. (RIM), Ericsson AB and EMC Corp., Ontario- based Nortel said in a statement. The companies aim to complete the sale this quarter pending approval from U.S. and Canadian courts, it said.

The purchase will give Apple and its bidding partners access to more than 6,000 patents and applications in areas including the Internet and chips from a company that was once North America’s largest maker of phone equipment. The winning bid trumped the $900 million Google had offered before the auction for Nortel’s remaining intellectual property.

“It’s most certainly a higher price tag than people were speculating about,” Hakan Wranne, an analyst at Swedbank Markets, said via phone. “Everyone needed something from the portfolio and none of the companies needed all of it.”

Research In Motion, maker of the BlackBerry smartphone, will pay about $770 million for its share of the patents, the Waterloo, Ontario-based company said in a statement. Ericsson will pay $340 million, the Stockholm-based networking-equipment maker said.

A Sony spokesman declined to comment how much the company agreed to pay. Spokespeople for Apple, EMC and Microsoft couldn’t immediately be reached.

Setback

The deal is a setback for Google as the company doesn’t have “the intellectual property rights portfolio that many of the other companies in the industry have,” Swedbank’s Wranne said.

Google had sought the patents partly to bolster its Android operating system, used in handsets made by Samsung Electronics Co., HTC Corp. (2498) and Motorola Mobility Holdings Inc.

“This outcome is disappointing for anyone who believes that open innovation benefits users and promotes creativity and competition,” Mountain View, California-based Google said in an e-mail. “We will keep working to reduce the current flood of patent litigation that hurts both innovators and consumers.”

The patents fetched more than the $3 billion Nortel previously raised for creditors by selling almost all its businesses. The patents also were sold at four times the $1.1 billion estimated in May by Peter Conley, managing director of Santa Monica-based MDB Capital Group LLC, which specializes in intellectual property.

Bankruptcy

Chipmaker Intel Corp. (INTC) and Rockstar Bidco LP last month received U.S. Federal Trade Commission approval to bid for the patents.

Nortel filed for bankruptcy in 2009 after posting a $5.8 billion annual loss as the global recession prompted customers to delay purchases.

“The size and dollar value for this transaction is unprecedented, as was the significant interest in the portfolio, among major companies around the world,” Nortel said in the statement. “The portfolio touches nearly every aspect of telecommunications and additional markets as well, including Internet search and social networking.”

Court approvals will be sought at a joint hearing expected to be held July 11, Nortel said.

To contact the reporters on this story: Steven Church in Wilmington at schurch3 at bloomberg.net; Hugo Miller in Toronto at hugomiller at bloomberg.net; Tim Culpan in Taipei at tculpan1 at bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2 at bloomberg.net