Tag: nortel

RIM Considers Another Bid for Nortel’s Patent Portfolio

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RIM is once again considering acquiring the patents for Nortel’s CDMA and LTE technologies. Control over these patents will help ward off costly and untimely lawsuits that seem to plague every big player in the mobile industry. The patents will also go into developing wireless products and services for the next generation of mobile connectivity.

The bid will be rivaling that of Google’s $900-million bid on the entire set of set of over 6000 wireless patents. Google has been trying to grow the size of its mobile patent portfolio ever since they acquired Android Inc. in 2005.

RIM has been fighting for these patents for a couple of years now and seems poised to grab a least a small piece of Nortel’s formidable mobile patent portfolio.

Why RIM will not suffer the same fate as Canadian giant Nortel

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RIM is for many both a great smartphone manufacturer and a source of patriotism. It’s a leader in the ITC (Information and Communications Technology) sector and their executives, especially Jim Balsillie, are quick to point out that it’s a Canadian firm.

This brief description may remind you of another Canadian firm: Nortel. Nortel was also a source of Canadian pride as a prominent, high-technology firm based in Canada.

Both companies, due to their size and influence, have a notable impact on the Toronto Stock Exchange. While RIM occupies about 3% of the TSX, Nortel once accounted for more than one-third of the main TSX index.

Although there are a few similarities in the two companies, they are completely different and it’s safe to say that RIM will not suffer the same fate as Nortel.

Management at Nortel was infamous for receiving millions in incentives that promoted unethical business practices. In 2004, several of its top executives – including former CEO Frank Dunn – were accused of cooking the books to inflate profit numbers, resulting in millions of dollars of bonuses to these individuals. Last year, criminal charges were laid against Dunn and others.

Jim Balsillie got in trouble with the the OSC which alleged the executives backdated and repriced stock options using dates on which the market price of RIM’s shares was relatively low. Handing out options at the lower prices had the effect of improperly enriching the recipients and, the OSC alleged, could have deprived RIM of about C$66 million.

While both companies seem to be involved in some shady practices, they can’t really be compared because they are on completely different scales. The result of the Nortel scandal resulted in billions in losses for shareholders. The result of the RIM and OSC case was that Balsillie paid a penalty of C$5 million ($4.1 million), while Co-Chief Executive Mike Lazaridis paid a C$1.5 million penalty. The two also paid investigation costs to the regulator.

According to Kevin Restivo, a communications technology analyst at IDC Canada, “RIM and Nortel are very different companies,” he said. “Other than the fact that they’re both based in Canada and both publicly traded companies in the ICT sector … the companies’ histories and similarities separate pretty quickly.”

Some point to competition in the telecom industry, coupled with the crippling accounting scandal, resulted in Nortel’s eventual demise. The telecom industry began to see a large number of mergers such as Alcatel-Lucent and Nokia Siemens Networks, which left Nortel at a disadvantage. With the accounting scandal at hand, the company was in no condition to recover and eventually had to be protected from bankruptcy and sold off.

It’s competition that is also the popular topic when discussing the future of RIM. The difference is that competition will actually make RIM stronger in the end. Sure, market share in North America is fluctuating given sales of the iPhone, but can anyone prove that Apple sales have a negative impact on RIM’s growth? The App Store led an evolution in the market that RIM is still generating considerable profits from, having followed the trend with App World. Competition is also increasing the overall number of smartphone users, and this trend is helping to increase sales for RIM. Other smartphone manufacturers may represent competition, but for some reason the Palm Pre is often cited. Remember, Palm only sold 810,000 units last quarter compared to 8.9 million devices for RIM.

So while these two companies represent the talent that Canada possesses in the ICT world, they will have two very different fates.

[Via]

Canadian government makes final ruling on Nortel LTE sale

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RIM has been lobbying very hard to get the Canadian government to intervene in the deal between Nortel and Sony Ericsson. The deal involves the sale of a variety of Nortel’s assets including their LTE operations, which are of great interest to RIM in order to future-proof devices.

The Canadian government has ruled on the issue and declined to review the $1.13 billion sale of Nortel Networks’ CDMA and LTE assets to Ericsson. The announcement was made by Canada’s Industry Minister, Tony Clement, and it closes any possibility of the Canadian government intervening in favor of RIM.

The underlying reasons for which RIM wanted the Canadian government to intervene are vague at best. The Investment Canada Act stipulates that the Canadian government must intervene if the sale of Canadian assets to a foreign country poses some security risk.

“There are no grounds to believe this transaction could be injurious to Canada’s national security,” Clement said Wednesday, adding that Ericsson “has the resources and customer base necessary to bring Canadian innovation to market. … This deal is very beneficial to Canada.”

So it looks as though RIM is going to have to find another way to acquire the LTE and CDMA technology it desires.

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Analysts review RIM shares given iPhone and Nortel news

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It has been a fairly intense month for BlackBerry. With the Back-to-School and holiday seasons fast approaching, RIM needs to churn out more devices and flood the market to meet the standard upswing in demand. That, coupled with Jim Balsillie’s moves to purchase the Phoenix Coyotes and RIM’s attempt at acquiring Nortel stock, there is no shortage of BlackBerry news. Given this amount of news, you can always expect an analyst to chime in with their views regarding where the stock is headed.

Phillip Huang, UBS analyst, has downgraded RIM to Neutral from Buy and cut his price target to US$88 from US$90 given the company’s price valuation. The analyst is also talking about concern regarding a new partnership between Verizon and Apple to distribute the iPhone.

“We’ve noted our expectation for Verizon Wireless to potentially announce a data-only Apple device this year,” he said in a note Monday. “Although we don’t expect a Verizon iPhone launch this/next year, we believe it could prove to be a sentiment headwind.” It is also possible the iPhone could launch on another operator in 2010, he said.

Peter Misek of Conaccord Adams, is taking a different view. He has maintained his Buy rating and US$95 target price for RIM. The potential government involvement and turnaround in the Nortel deal, has been cited as his reason for maintaining the Buy rating.

Personally, I don’t feel iPhone competition is a valid reason for downgrading stock. If you look at the numbers, BlackBerry dominates hardware sales because they cover a spectrum of users, while the iPhone only appeals to one form factor demographic and lifestyle user. With regards to the Nortel deal, I would be surprised if there is any turnaround. The government would have to declare that the sale of Nortel assets are a matter of national security, which is a tough case to make. So while there has been a lot of news this past month, the RIM ship is sailing steadily.

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RIM remains interested in acquiring Nortel patents and assets

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On Saturday, Nortel officially sold a portfolio of CDMA and next-generation LTE wireless assets to Swedish Ericsson. While RIM did not enter the Nortel bid officially, they’re still looking for ways to acquire some of Nortel’s technology.

However, we’ve learned today that RIM and Nortel have been in negotiations over other key patents related to the next-generation wireless business “for months.”

On Sunday, RIM reiterated that it “remains interested in acquiring certain Nortel assets,” without providing specifics.

All of this information leads me to believe that RIM will find a way to acquire the CDMA and LTE technology, required to future proof BlackBerry devices and keep costs low but not having to pay royalties for the technology.

The question is: what patents are left to be sold, and will they be enough for RIM’s long term strategy?

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Nortel bidding starts today: RIM still not signing agreement

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Today in New York, the bidding starts for Nortel Networks Corp.’s largest business unit. RIM has been denied entry into the bidding process because it has failed to sign an agreement that the other businesses have signed.

Nortel CEO Mike Zafirovski, has explained to the press that RIM is refusing to sign what Zafirovski has called “a standard non-disclosure agreement before getting a close look at Nortel’s books.”

RIM has said it will continue to find ways to purchase the business unit and add it to RIM’s valuable intellectual property portfolio. If RIM does manage to purchase the business unit, they will have access to CDMA and LTE technology which will go a long way to improving BlackBerry devices and network infrastructure.

“That’s really what these guys are after,” said Nizar Assnie, vice-president of Vancouver-based IE Market Research Corp. The next-generation technology will provide carriers with the ability to offer cellphones with advanced, data-heavy features such as video streaming at ultra-fast speeds. Leading in LTE is a must “if you’re going to be a serious network infrastructure player in the wireless space [in] ten years,” he said.

There is clearly something more to the “standard non-disclosure agreement” that is causing RIM to refuse to sign. If one had to guess, the agreement probably contains some element that RIM legal, Balsillie and Lazardis, deem to be detrimental to the profitability of the purchase. Either that, or perhaps they don’t see the purchase as being a necessary step for the company, and they’re saying “take our offer or leave it, we’re not signing anything.”

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