Microsoft (MSFT) Lawyers to Protect Patent Secrets in Nortel Case

NEW YORK (TheStreet) -- Microsoft (MSFT) will have numerous lawyers at the ready during a trial set to start Monday to divvy up the assets of bankrupt Nortel Networks, formerly the largest maker of telephone equipment in North America. 

Following Nortel's bankruptcy filing in 2009, Microsoft teamed up with Apple (AAPL) and Sony (SNE), under the joint venture Rockstar Consortium, to purchase more than 6,000 of its patents for $4.5 billion. In the Nortel trial, creditors are arguing over the funds raised in that patent sale among other auctions. 

Presiding judge Kevin Gross will defer questions of confidentiality on patent-related documents to Microsoft and Rockstar lawyers throughout the trial. The trial is scheduled for five weeks in the U.S. Bankruptcy Court of the District of Delaware. 

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Separately, TheStreet Ratings team rates MICROSOFT CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate MICROSOFT CORP (MSFT) 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 largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels, solid stock price performance and good cash flow from operations. 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:

  • MSFT's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.01, 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. When compared to other companies in the Software industry and the overall market, MICROSOFT CORP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • MICROSOFT CORP's earnings per share declined by 5.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MICROSOFT CORP increased its bottom line by earning $2.60 versus $2.00 in the prior year. This year, the market expects an improvement in earnings ($2.70 versus $2.60).
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