Is Google Trying to Rob Microsoft Blind?

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By Mark Knapp | December 19, 2012 5:53 AM EST

Wall St. Cheat Sheet

The anticipation at Microsoft (NASDAQ:MSFT) and Google (NASDAQ:GOOG) must be boiling to the top, as both companies now await the verdict of their patent lawsuit, which could mean millions of dollars a year or far, far less.

What’s the deal?

In November, was brought to court by Motorola, which is now owned by Google, over the use of Motorola patents in Microsoft products like Xbox and Windows 8. Two key patents are a video compression and a Wi-Fi patent. The judge overseeing the case is expected to rule on it early next year.

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CHEAT SHEET Analysis: Will the judge’s decision move share prices, by how much, and whose?

One of the core components of our CHEAT SHEET Investing Framework focuses on catalysts that will move a company’s stock. A court decision with in the balance certainly has potential to move share prices, but how much will depend on the valuation the Motorola patents receive.

What’s at stake?

Microsoft is pushing for each patent to be valued at less than $1 million per year, while Motorola sought to receive a percentage of Microsoft’s sales on products using the patents, which could amount to more than $100 million a year. For the video compression patent alone, Motorola is hoping for 200 times more than Microsoft believes it should pay. If the judge supports Motorola, Google could see a boost as it would own a valuable patent portfolio with Motorola. If the judge supports Microsoft, Google could dip down as its patent portfolio is devalued. Microsoft, in turn, would keep more of its product revenue.

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The article was first published by Wall St. Cheat Sheet and does not represent the views or opinions of International Business Times.

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