{"id":2302,"date":"2011-12-12T19:50:21","date_gmt":"2011-12-13T00:50:21","guid":{"rendered":"http:\/\/www.cusjc.ca\/ottawainsight\/?p=2302"},"modified":"2017-11-19T18:51:44","modified_gmt":"2017-11-19T23:51:44","slug":"a-hard-one-to-lose","status":"publish","type":"post","link":"http:\/\/www.cusjc.ca\/ottawainsight\/?p=2302","title":{"rendered":"A hard one to lose"},"content":{"rendered":"

Despite failing to take over its major competitor, Wi-LAN Inc. remains Ottawa\u2019s most valuable company, partly through growth but equally through the takeovers and bankruptcies that have eliminated all of the past giants of the local high-tech sector.<\/span><\/p>\n

With a market capitalization of about $700 million, the 19-year-old and widely held company boasts of having roughly $190-million cash on hand and a track record of business growth, from $2.1-million in operating revenue in 2006 to $50.7-million in 2010.<\/p>\n

It recently tried but failed to acquire its major competitor in Ottawa. Mosaid Technologies Inc. accepted a $46 a share offer from U.S. private equity firm, Sterling Partners, in a $590-million<\/span> deal that shelved Wi-LAN\u2019s $531-million or $42 per share offer on November 1, 2011.<\/p>\n

The failed acquisition cost Wi-LAN about $14 million for legal, accounting and adviser fees, as well as a commission and interest on a $230-million bond sale it had issued to raise money for the transaction.\u00a0 The bid costs will drop to approximately $10-million as Wi-LAN will sell its previously-owned Mosaid shares to Sterling Partners.<\/p>\n

It will also pay back the $230-million debt with interest by January 2012. The money was raised by selling convertible debentures.<\/p>\n

PATENT POWERHOUSE<\/span><\/strong><\/p>\n

The combination of Wi-LAN and Mosaid, which would have been a business of about $200-million annual revenue, would have created a global IP licensing powerhouse in Ottawa with more ability to monetize patent rights.<\/p>\n

Wi-LAN\u2019s management has demonstrated an ability to develop and acquire patents and to monetize them, predicting the company\u2019s share price would hit $8.25 this year.<\/p>\n

Wi-LAN\u2019s chief executive officer Jim Skippen said the merger would have been an \u201cexcellent strategic growth opportunity,\u201d for his company.<\/p>\n

But Wi-LAN remains profitable because it has a stable revenue source, many analysts and experts say. It develops, acquires, and licenses a range of intellectual property for technologies used in communication and consumer electronics products, including wireless networking and V-Chip.<\/p>\n

\u201cWi-LAN has negotiated multi-year licensing agreements (typically five to seven years) with over 250 of the largest global technology companies. These agreements provide a stable revenue base,\u201d Tom Liston and Justin Kew of Versant Partners Inc. investment bank said in a report to investors in October 2011.<\/p>\n

The analysts said Wi-LAN\u2019s management has demonstrated an ability to develop and acquire patents and to monetize them, predicting the company\u2019s share price would hit $8.25 this year. They also predicted its revenues this year at US$111.4 million, US$131.9 in 2012, and US$145.1 in 2013.<\/p>\n

\u201cWe believe there is significant room for growth for intellectual property (IP) intermediaries such as Wi-LAN,\u201d they said.<\/p>\n

On the Toronto Stock Exchange, the company\u2019s shares traded between $7 and $5 in November 2011, up from between $5 and $4 in November the previous year.
\nKew said in an interview that the company\u2019s shares are likely to trade at $10 in a year or two in the future.<\/p>\n

Those estimates are not far from one provided by Value Sciences Inc., which describes itself as one of Canada’s independent investment counsel firms. It recommends buying Wi-LAN shares at any price below $10 and selling them at any price above $14 in 2011.<\/p>\n

\u201cSuccess of patent trolls (these are the guys who buy patents on spec) have made legitimate technology transfer companies like Wi-Lan quite profitable and continue to attract attention. They are also pretty shrewd to spot value in a rival Mosaid which has also hurt the stock recently. Buy now before everyone thinks it is hot,\u201d FPinfomart.ca website partly quotes the firm\u2019s 2011 recommendation.<\/p>\n

A LARGE PATENT PORTFOLIO<\/span><\/strong><\/p>\n

Wi-LAN has a portfolio of more than 1,400 patents that it has so far licenced to more than 250 companies worldwide. They include big names like Nokia, Panasonic, Cisco, Research In Motion, Sony, Samsung, Sanyo, and Toshiba.<\/p>\n

\u201cCompanies who make consumer electronic products want to make the most competitive and best products they can and in order to do that they need to use patents for technologies that we own.\u201d<\/p>\n

The companies need Wi-LAN\u2019s license to use technologies like Wi-Fi, CDMA, WiMAX, LTE, ADSL, DOCSIS, Bluetooth, and V-Chip in their electronic products.<\/p>\n

The company\u2019s strategy to increase revenues will consist of examining its portfolio of patents and identifying new licensing programs and partnerships.
\nWi-LAN\u2019s director of marketing and communications, Kathryn Hughes, says the company wants to acquire companies with technologies that are most needed by the market.<\/p>\n

\u201cCompanies who make consumer electronic products want to make the most competitive and best products they can and in order to do that they need to use patents for technologies that we own,\u201d she says. \u201cSo we see that there will be continued demand.\u201d<\/p>\n

GROWTH IN IP LICENSING<\/span><\/strong><\/p>\n

Nicholas Wilson, an Ottawa-based computer scientist and lawyer who also advises Research In Motion on IP-related commercial matters, estimates that the IP licensing industry will continue to grow.<\/p>\n

In September 2011, Wi-LAN sued big tech companies, including Apple, Dell and Hewlett-Packard for allegedly infringing on its patents.<\/p>\n

\u201cThe patent licensing economy will continue to thrive and be a valuable source of income for patent holders, especially in industries where one product spans multiple innovative industries,\u201d he says. \u201cSmartphones are a good example of this, with the phone itself being a platform for multiple innovative technologies, such as cameras, GPS, email, web browsing etc.\u201d<\/p>\n

Other examples he gave include cars where he observes their \u201cever increasing use of technological add-ons.\u201d<\/p>\n

\u201cIn such industries, patent licensing offers valuable opportunities because a successful product comes along and adopts previously developed technology whole. Licensing opportunities and fees will be high in these industries, especially if American laws and their judicial process remain as they are today,\u201d he observes.<\/p>\n

In September 2011, Wi-LAN sued big tech companies, including Apple, Dell and Hewlett-Packard for allegedly infringing on its patents.<\/p>\n

The law suits, which were filed in a U.S. District Court in Texas, are always considered a potential boost for Wi-LAN\u2019s patents and revenues since they mean the sued companies may have to pay Wi-LAN to use the patents if it wins the cases.<\/p>\n

That could happen given Wi-LAN\u2019s recent successes in litigations. In November 2011, a U.S. Patent and Trademark Office (PTO) validated most of the rights in \u201c759 Patent\u201d, one of Wi-LAN\u2019s key patents. U.S.-based Broadcom Corp. and Intel Corp. had asked for the re-examination of the patent in January 2010 after Wi-LAN had sued.<\/p>\n

PTO had also allowed more than 100 new claims in the same patent, which covers communication protocols key to wireless transmissions, and Wi-Lan described the ruling as \u201cvery favourable\u201d for its business.<\/p>\n","protected":false},"excerpt":{"rendered":"

Despite failing to take over its major competitor, Wi-LAN Inc. remains Ottawa\u2019s most valuable company, partly through growth but equally<\/p>\n","protected":false},"author":156,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,1],"tags":[255],"class_list":["post-2302","post","type-post","status-publish","format-standard","hentry","category-corporate-profiles-2011","category-news","tag-eugene-kwibuka"],"_links":{"self":[{"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/2302","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/users\/156"}],"replies":[{"embeddable":true,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2302"}],"version-history":[{"count":14,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/2302\/revisions"}],"predecessor-version":[{"id":4402,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/2302\/revisions\/4402"}],"wp:attachment":[{"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2302"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2302"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2302"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}