When the news first broke that Yahoo (YHOO) is seeking patent licensing fees from Facebook (FB), it seemed business as usual.
As a long-time member of the Institute of Electrical and Electronics Engineers, its publication Spectrumhas been my regular read for years. Spectrum has given its top ranking to Yahoo patents in Communication/Internet services category.
Yahoo had already set the mold when it received 2.7 million shares of Google (GOOG) before Google went public in exchange for Google licensing patents that Yahoo inherited when it acquired Overture.
My first reaction was that Yahoo is angling to receive shares in Facebook before it goes public. But this obvious conclusion did not ring true for two reasons.
First, the timing of making the dispute public is curious. Facebook has nothing to gain, so publicity is clearly engineered by Yahoo. Why now? Yahoo has owned these patents for a long time and Facebook has been using them for a long time.
Second and more importantly, Yahoo stands to gain more by becoming a strategic partner for Facebook than merely extracting a license fee.
A little reflection reveals the real skinny behind Yahoo’s behavior. Yahoo may be trying to position itself for a sale at a higher valuation than has been available to date.
In its battle with Apple (AAPL), Google has put a very high valuation on patents. Google paid $12.5 billion for Motorola Mobility (MMI) to get hold of its patents. A consortium that included Microsoft(MSFT) did not pay as high of a price for Northern Telecom’s patents.
The patents Yahoo acquired when it bought Overture may prove more valuable than Motorola patents…Read more at Forbes
Investors may consider a scale in Yahoo (YHOO) in the zone of $12 – $13.50. When the timing is just right a buy signal will be provide on the the Real Time Feed of ZYX Buy Change Alert.
The track record of the last five years shows that those investors who rigorously follow ZYX Change Method Trade management Guidelines far outperform investors who do not follow these guidelines. These guidelines are available to the paying subscribers to The Arora Report.
