Monday, April 1, 2013

MSFT: Vringo: How Much Is A Settlement With Microsoft?

Vringo: How Much Is A Settlement With Microsoft?
by Chris Hofmann

For those who don't know, Vringo (VRNG) is an IP company currently in litigation with Google (GOOG), Microsoft (MSFT), and ZTE. Google has been the main focus thus far, and has been discussed in detail here and here. There have been possible decimal place errors, latches disagreements, possible new trials, and a very long wait (still ongoing) for the judge to rule on the forward royalty rate. However, VRNG did have a jury rule that its patents are valid and infringed upon, which gives it an edge as it now sues Microsoft's Bing search engine. Clearly Microsoft agrees, as Vringo and Microsoft are now in settlement discussions. As we all wait for the judge to rule in the Google case, I think it is important to analyze what sort of settlement may be reached against Microsoft. Will it only be $50 million? Or maybe $1 billion? Will it add $1 or $5 to the stock price? How can somebody possibly buy or sell Vringo on this new development without first taking the time to at least value the settlement? There are numerous variables at play that could vary wildly, but through the following analysis, I hope to give a reasonable range of expectations as well as my personal opinion. read more »

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