Alca-Lu Patent Portfolio Could Be Worth $9B, More Than Company

Alcatel-Lucent (NYS: ALU) has lost 30 percent of its stock market value since reporting sales figures last week that failed to meet analysts estimates. The company, which was valued at $100 billion at its peak, is now worth $7.8 billion, having made continuing losses since it acquired Lucent in 2006.

However, Bloomberg revealed that Alcatel-Lucent's patents could be worth double the $4.5 billion that Nortel Networks' licences sold for in a bankruptcy auction in June.

Rather than focusing on Alcatel's money-losing operations, investors should be "looking at the next piece, which is a very large patent portfolio that has actual value that's being undervalued by the public market," said Alkesh Shah, an analyst with New York-based investment advisors Evercore, in an interview with Bloomberg. "The patent portfolio is one of the hidden assets of value that I don't think investors have paid much attention to."

This viewpoint has prompted speculation that Alcatel-Lucent could be valued significantly higher if its business units were valued separately or sold off, with Evercore suggesting a $20 billion sale price for the entire company. However, French labor regulations make takeovers difficult, although the 18,800 U.S. patents it holds could be enough to tempt some to try.

Commenting on the patents held by Alcatel-Lucent, Chris Marlett, CEO of MDB Capital, a U.S. firm specializing in intellectual property, said that the company has 14,000 approved patents as well as submitted applications for 4,800 more. Alcatel inherited Bell Labs, and its patents, with the acquisition of Lucent.

"Companies are just now waking up to the value of IP," said Marlett. "When you look at Alcatel, they have one of the largest patent portfolios out there. Alcatel is definitely one of those companies that has the opportunity to monetize a lot of it."

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