Google (GOOG) And Cisco (CSCO) Enter Patent Agreement

NEW YORK (TheStreet) -- Google  (GOOG) and Cisco  (CSCO) announced a new long-term patent cross-licensing agreement Tuesday.

Shares of Google were gaining 1.3% to $1148.39, while Cisco was rising 0.2% to $21.59.

The agreement covers the majority of patents in both companies' portfolios in a wide range of products and technologies. Neither Google nor Cisco will discuss the financial terms of the agreement.

The goal of the agreement is to help decrease the number of patent lawsuits in the technology industry. The agreement lets Google and Cisco "extract significant value" from their patents while reducing the risk of future lawsuits.

"Our agreement with Cisco will reduce the potential for litigation, letting us focus instead on building great new products," Allen Lo, Google's Deputy General Counsel for Patents said in a statement. "We're pleased to enter into this cross-license, and we welcome discussions with any company interested in a similar arrangement."

Both Google and Cisco are members of the Coalition for Patent Fairness, an advocacy group dedicated to lobbying for patent reform.

TheStreet Ratings team rates GOOGLE INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate GOOGLE INC (GOOG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, robust revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 50.61% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GOOG should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • GOOGLE INC has improved earnings per share by 14.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GOOGLE INC increased its bottom line by earning $36.04 versus $32.47 in the prior year. This year, the market expects an improvement in earnings ($52.71 versus $36.04).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 17.2%. Since the same quarter one year prior, revenues rose by 16.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although GOOG's debt-to-equity ratio of 0.06 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 4.28, which clearly demonstrates the ability to cover short-term cash needs.
  • You can view the full analysis from the report here: GOOG Ratings Report


TheStreet Ratings team rates CISCO SYSTEMS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate CISCO SYSTEMS INC (CSCO) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.2%. Since the same quarter one year prior, revenues slightly increased by 1.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Although CSCO's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 2.65, which clearly demonstrates the ability to cover short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Communications Equipment industry and the overall market, CISCO SYSTEMS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for CISCO SYSTEMS INC is rather high; currently it is at 65.64%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 16.48% trails the industry average.
  • You can view the full analysis from the report here: CSCO Ratings Report

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