RIM Said Weighing Bid to Top Google Offer for Nortel Patents
Research In Motion Ltd. (RIMM) is considering a bid for Nortel Networks Corp. (NRTLQ)’s portfolio of wireless technology patents that would top Google Inc. (GOOG)’s $900 million offer, two people familiar with the plans said.
RIM, maker of the BlackBerry smartphone, is weighing an offer that would keep Google from gaining control of about 6,000 Nortel patents and patent applications, said the people, who couldn’t be identified because the plans aren’t public.
A group of technology companies, including mobile-phone makers, may also bid on the patents to stop Google, two people said. RIM, based in Waterloo, Ontario, is considering joining the group, one person said. Nortel’s patents would allow buyers to control and license technology used in BlackBerrys, Apple Inc. (AAPL)’s iPhone, and devices that run on Google’s Android operating system.
Handset makers may be motivated to pool their resources on a bid to protect themselves should Google try to use the patents to gain influence and royalties in the wireless industry, David Mixon, a patent attorney at Bradley Arant Boult Cummings LLP, said in an interview. The portfolio includes patents for wireless-video and LTE, or long-term evolution, technologies.
“There is great potential to turn that patent portfolio around and go after smaller competitors especially,” said Mixon, who thinks the bidding should go beyond $1 billion.
Google earlier this month made the opening bid as part of a “stalking-horse” agreement that will lead to a June 20 auction if other bidders emerge. A second bidder will have to offer Nortel at least $929 million and subsequent bids must be at least $5 million more, according to the bidding rules.
Nortel filed for bankruptcy in January 2009 after a loss of $5.8 billion as its customers put off spending on new equipment amid the recession. Since then, Nortel has raised about $3 billion for its creditors by selling businesses, with the patents portfolio the last of the major assets to be sold.
RIM co-Chief Executive Officer Mike Lazaridis declined in an interview earlier this month to comment on whether his company would bid for the patents, which include LTE patents he has called a “national treasure” in the past.
RIM spokeswoman Tenille Kennedy said the company does not comment on rumors or speculation. Aaron Zamost, a spokesman for Google, declined to comment.
RIM fell 52 cents to $53.40 in Nasdaq Stock Market trading yesterday, and has dropped 11 percent this year. Nortel’s 10.75 percent bonds due in 2016 rose more than 1 percent to 91.63 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
“Nortel had some very good R&D engineers and I’m sure there are some very valuable patents in that portfolio,” said Alkesh Shah, an analyst at Evercore Partners Inc. in New York. He has an “overweight” rating on RIM.
The case is Nortel Networks Inc., 09-10138, U.S. Bankruptcy Court, District of Delaware (Wilmington).