Showing 9 posts tagged nortel
I was wrong, email is very useful.
Another inside look at the Nortel patent fiasco by Nathan Myhrvold, whose own group considered bidding as well.
One key part:
A third shocker was how Google structured its public bid. Neither I nor anybody I have spoken with can explain what Google was thinking. Had it simply waited for the auction, it easily could have won. Other bidders had much lower expectations and wouldn’t have had the time to get board approval for bids large enough to stay in the game.
Myhrvold argues that Google’s own huge $900 million opening (stalking-horse) bid set the stage for their loss. He implies that maybe they just didn’t know what they were doing in the bidding process — which also led to the jackassery of bidding mathematical constants.
The expected selling price of the patents had been $200 million to $400 million just six months ago. Then Google came out swinging in what looks to be a huge strategic blunder, and this led to all of their competitors deciding to team up to kick the shit out of them.
Well, so much for Google attempts to lobby the courts to either stop the sale of the Nortel patents or to force big changes like the Novell patent deal.
This was approved very, very quickly — by both the U.S. and Canada. Why? Well, first and foremost, Nortel (and their creditors) need them money. Second, unlike some idiotic arguments made over the weekend by anti-trust “experts”, Google (and Intel) was just flat-out out-bid for the patents. They were willing to go up to $4.4 billion, but Apple (Rockstar Bidco) went to $4.5.
As Tom Hals reports for Reuters:
Delaware bankruptcy judge Kevin Gross said it would be a “$4.5 billion mistake” not to approve the sale.
Also worth noting, Verizon and HP objected to the sale as well (no mention of Google, but you know they did). But the court reiterated that existing licensing agreements would have to be honored with the sale.
In other words, Microsoft (which had licensing deals with Nortel for the patents as well) would have been covered regardless. Yet they still put up major money to be a part of Rockstar Bidco. Why? Because they fucking hate Google and want to kill Android (or make a shit ton of money from it). That’s why.
That was the name of the group including Apple, Microsoft, and RIM that bid for (and won) the Nortel patents at $4.5 billion.
Unsurprisingly, the deal is now coming under antitrust scrutiny. Google needed to win these patent rights. Instead, they dicked around and all their main rivals won them. This could put Android in serious jeopardy.
Good reporting by Jia Lynn Yang for The Washington Post, except for this one glaring issue:
“Why is the portfolio worth five times more to this group collectively than it is to Google?” said Robert Skitol, an antitrust lawyer at the Drinker Biddle firm.
Um, it’s not. Google bid up to $4 billion themselves and then stopped. The $900 million bid, which he’s clearly referring to, was simply the “stalking horse” bid to get the ball rolling.
That seems like something an anti-trust lawyer (or a reporter) should know before commenting on (or writing about) a story.
Update: It actually looks like Google may have gone up to $4.4 billion before they stopped bidding, making Skitol’s comment look even more dumb.
Nadia Damouni for Reuters:
“Google was bidding with numbers that were not even numbers,” one of the sources said.
“It became clear that they were bidding with the distance between the earth and the sun. One was the sum of a famous mathematical constant, and then when it got to $3 billion, they bid pi,” the source said, adding the bid was $3.14159 billion.
“Either they were supremely confident or they were bored.”
There’s a time to have some fun. And then there’s a time to be serious. When bidding on 6,000+ patents that can stop a rush of lawsuits against your crown jewel of the future (Android), you’d think that would be a time to be serious.
As a result of such shenanigans and Google ultimately losing these patents, they’ll now be forced to do something decidedly more serious: push for government intervention to stop the patent sale.
Here we go. This bidding war is sure to be fun. Google bidding for the right to protect themselves defensively. Apple bidding for the right to protect themselves offensively. RIM bidding for the right not to die entirely when that other business of their’s goes belly-up.