Alcatel-Lucent Joins Ericsson, Kodak in Trying to Milk Cash From Patents

Alcatel-Lucent (ALU), the latest technology company to announce plans to make money from its patents, may generate several hundred million euros this year alone from its trove of 29,000 rights, Chief Financial Officer Paul Tufano said in an interview today.

France’s largest telecommunications-equipment maker is offering access to its patents through a licensing syndicate. Asked whether the deal with RPX Corp (RPXC). would generate a few hundred million euros, Tufano said: “More than that.”

After consuming about 3.5 billion euros ($4.6 billion) in cash over five years since the 2006 merger of Alcatel SA and Lucent Technologies, the Paris-based company is following rivals such as Ericsson AB (ERICB) to set up a licensing strategy as spending by phone operators on network gears slows. Alcatel-Lucent (ALU) could generate 500 million euros to 1 billion euros in revenue in 2012 from the patents, according to four analysts.

“Licensing is a hot trend in the tech sector right now, but if these numbers turn out to be true, then maybe Alcatel should stop everything else and do only licensing,” said Thomas Langer of WestLB Equity Markets in Dusseldorf, Germany.

Simon Poulter, a spokesman for Alcatel-Lucent (ALU), declined to comment on the revenue projections.

Google Inc. bid $12.5 billion last year for Motorola Mobility Holdings Inc. as part of a growing trend of technology companies buying patents to defend themselves again intellectual-property suits.

Voice Recognition

Eastman Kodak Co. (EK), the photography pioneer that filed for bankruptcy protection last month, is seeking to license its brand to other camera makers as it exits the market in the first half of 2012.

Alcatel does not plan to sell its patent portfolio, which includes voice-recognition and videoconferencing technology, Chief Executive Officer Ben Verwaayen said on a conference call. “By syndicating the patent portfolio, we found a creative way to extract value without weakening ownership.”

Asset disposal has been part of the CEO’s turnaround plan for the company. Verwaayen, who took over in 2008, has sold a stake in the aerospace manufacturer Thales. Alcatel-Lucent this month completed a $1.5 billion transaction to sell its Genesys call-center software unit to Permira Advisers LLP.

Alcatel-Lucent rose 12 percent to 1.69 euros as of 2:21 p.m. in Paris trading. The stock jumped as much as 22 percent earlier today, the most since October 2008, after the gear maker forecast higher profit margins and positive cash generation in 2012.

Last year marked the end of Verwaayen’s three-year strategy to return the company to a profit. Alcatel reported its first full-year net profit in six years, though it has pushed back to 2012 its goal of generating positive cash flow.

Alcatel Chairman Philippe Camus praised Verwaayen in a Nov. 18 statement, after the Wall Street Journal reported that the company’s board was facing investor pressure to replace the CEO.

To contact the reporter on this story: Marie Mawad in Paris at mmawad1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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