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Nortel Auction: Potential Winners & Losers

Nortel, Google and Ericsson's responses have been added to this story.

TORONTO ( TheStreet) -- Bidding for a slew of patents held by bankrupt Canadian telecom specialist Nortel began on Monday. Speculation is now mounting as to who amongst the likes Google (GOOG - Get Report), Apple (AAPL - Get Report) and Nokia (NOK) could be the big winners and losers.
A Google or Apple win in Nortel's patent auction could spell bad news for Nokia, says Gleacher & Company.

Google has the $900 million opening bid for the Nortel patents, which encompass wireless video, Wi-Fi, Internet search and social networking.

Last week, the Federal Trade Commission also gave Apple the green light to bid on Nortel's patents, although Nokia, Intel (INTC - Get Report) and Ericsson (ERIC - Get Report) are also said to be in the patent hunt. Additionally, rumors have emerged that Microsoft (MSFT - Get Report) is a bidder, underscoring the software giant's desire to boost its presence in the mobile market.

Both Google and Apple, however, are thought to be frontrunners, according to Stephen Patel, an analyst at Gleacher & Co., thanks to their respective cash balances of $37 billion and $65 billion.

"We would view a win by either as negative for Nokia as it would reduce Nokia's ability to assert patents against Android vendors or Apple once its current Apple agreement expires," explained Patel, in a note. "Google has suggested that its intent for purchasing the patents is largely defensive, so we do not view it as a threat to other vendors."

Google announced its bid for the Nortel patents in April, explaining that the technology will help the search giant fend off any future patent litigation.

Newly-reinstalled Google CEO Larry Page is also expected to sharpen the company's focus around mobile devices and search, a strategy that would be boosted by Nortel's patents.

A Microsoft win, however, would be better news for Nokia, according to Gleacher's Patel. "A Microsoft acquisition of the patents would both protect Nokia and raise the possibility of both companies jointly asserting patents against vendors in competing ecosystems," he noted.

Patel says that a final sale hearing is scheduled for July 11, although it could be another one to two weeks before the final winning bid is known, he added.

"The auction is ongoing," explained a Nortel spokesperson, in an email to TheStreet, but said that the company will not comment on the auction until it has been completed. "A press release will be issued at that time," added the spokesperson.

Apple, Nokia, Intel, and Microsoft have not yet responded to TheStreet's request for comment on this story. Google and Ericsson declined to comment.

With the smartphone market rapidly escalating into something of a technology arms race, the major players are constantly jostling for position around key patents. Nokia, for example, recently said it settled patent litigation with Apple, noting that the settlement would be positive for its second-quarter earnings.

-- Written by James Rogers in New York.

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