RIM's LTE Patents Weak Sauce for Stock Boost: Analyst

NEW YORK (TheStreet) -- Research In Motion's (RIMM) 4G wireless patents are worth too little to make their purchase by rivals Apple(AAPL) or Google(GOOG) a practical way to boost the company's long-suffering stock price, according to an analyst report released Wednesday.

RIMM's LTE patents for wireless networks are worth a maximum of $1 billion, and just 1 percent of the value of all total industry LTE patents if the company continues to sell handsets, according to a "deep dive" published by Jeffries analyst Peter Misek. The 'liquidation value" of all patents is $2.5 billion if RIMM were to stop selling handsets.

Based on his findings, Misek downgraded his price target for RIMM from $25 to $21, below its current market prices and gave the stock an "underperform" rating.

RIM shares are down roughly 3 percent today.

Misek wrote in his note that "RIM patents [are] relatively weak" because the bulk are for security instead of innovation in upgraded wireless networks. As a result, he says the company, "may have to pay a fair amount in LTE royalties."

In June 2010, RIMM settled with Motorola Mobility for a wireless royalty dispute. Other companies with handset businesses like Google that have been putting their cash to work to buy patent for wireless 4G communications to avoid paying royalties to other patent holders.

In August, Google bought Motorola Mobility for $12.5 billion because new Chief Executive Larry Page said the acquisition "will help protect Android from anticompetitive threats from Microsoft, Apple and other companies." In the last year, Microsoft (MSFT) filed lawsuits against users of Google's Android operating system like Barnes & Noble for patent infringement.

Deal making and speculation about the value of future deals have bolstered the stock prices of Motorola(MMI) , Nokia and Nortel, who all have LTE wireless patent portfolio's that Misek values above $1 billion. Since the beginning of the year, shares in Motorola Mobility and Nokia have outperformed RIMM.

In his note Misek says that value for RIMM's patents "would be in licensing the patents to the other third of new and upcoming wireless entrants." Other patents for security would be worth a total of $1 billion if it continues to make handsets. Misek estimates that LG, Qualcomm (QCOM) have LTE patent portfolios worth roughly $8 billion and that InterDigital, Motorola and Nokia's portfolios are worth more than $3 billion.

>To order reprints of this article, click here: Reprints