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InterDigital's Patent Power Petering Out

NEW YORK, ( TheStreet) -- Google (GOOG - Get Report) and Apple's (AAPL - Get Report) recent patent-buying splurge has sent the values for some tech companies soaring.

With the going rate for mobile tech patents running about $742,679 a piece, you'd think InterDigital (IDCC - Get Report), a wireless tech specialist with 8,800 patents, would be holding a pretty hot hand.

Investors aren't so convinced. InterDigital's market value stands just shy of $3 billion, less than half the $6.5 billion value of its patent portfolio in this recently-frothy market.

"Do you think a 2G or 3G patent is as valuable as a 4G patent?" asked one industry strategist, referencing the quality -- not just the quantity -- of a group of patents a company might be considering.

The $742,679 yardstick is not an accurate measure of all intellectual property holdings, say Wall Street analysts.

"It's all about essential patents, not total patents," said Tavis McCourt, an analyst with Morgan Keegan. "And then it's up to the quality of lawyers and industry standard royalty payments to determine their worth."

In InterDigital's case, there have been some recent, unfavorable events that may have impacted how it's viewed by potential patent suitors.

The stock market crash certainly isn't helping InterDigital's value. And Google's pass on buying InterDigital -- Google took a good look at its assets and decided instead to pursue a $12.5 billion deal for Motorola (MMI) -- isn't exactly a ringing endorsement.

InterDigital has also had a colorful litigation history during the rise of cell phone market.

In years past, InterDigital won several settlements and entered licensing deals with giants like Nokia (NOK), Research In Motion (RIMM) and Samsung. But many of those cases involved earlier-generation wireless technology. And last month, InterDigital started a new round of patent infringement complaints against Nokia and added Huawei and ZTE to the list.

Another potential strike against the potential value of InterDigital's patents might be evident in the company's most recent earnings report. Second-quarter profits fell by half from year-ago levels on a 23% drop in revenue. The company pointed to a drop in patent royalty payments and rising legal costs as contributors to the declines.

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