NTP would drop lawsuit for 5.7% of RIM sales through 2012
posted December 9th 2005 3:00PM
With their stock having taken a nose dive following the latest ruling against them, and Wall Street encouraging a quick resolution to the matter, RIM is back at the bargaining table with NTP trying to stave off a potentially disastrous injunction. After having a proposed $450 million settlement ruled invalid by Judge James Spencer, NTP approached RIM this week about settling for a one-time payment of 5.7% of RIM's projected sales through 2012 (which is when the NTP patents in question expire). We're not so good with math 'round here, so if RIM's 2004 sales were $610 million, assuming conservative growth, how much dough does that 5.7% work out to? First person to answer correctly gets exempted from losing Blackberry service should talks break down and NTP prevail in court (note: offer not valid in the US).
I'd say roughly $300M, assuming RIM sales increase over the years.
$35 million. That's close enough to $450 million, isn't it?
$35 million. That's close enough to $450 million, isn't it?
$450? i wonder why it wasnt accepted. ;-)
cnbc said that ntp was asking for a 5.7% royalty PLUS a $670 mln cash settlement.
If you assume 15% Growth in sales per annum for RIM, that's aproximately $477 Million to NTP. The final year get's NTP ~$92 Million on ~$1.62 Billion in Sales for RIM.
Obviously, if RIM has larger projected growth, NTP would see even more money.
Hah, damn, someone noticed the $450 settlement before I did. :( But yeah, that would have been a good deal, they should have snapped that up before the $1bln settlement came up...
-Taylor
#4 (tigs), that makes more sense. Otherwise this comes out to less than the original $450 Million, even with aggresive growth till 2012.
Assuming 10% annual growth (maybe not too conservative, but the damn things are addictive after all) the 5.7% from 2005 through 2012 would add up to $437,288,412.16.
@ $610M FY04 sales figure, 2% inflation per year until 2012; settle for 5.7% will yield $339,168,430.55. That's minus the $670M #4-post mentioned.
Heck ya I'll take the deal. Oh should I have factor in the EBITA? Ya, I'm a dork, bored at work on Friday.
@ $610M FY04 sales figure, 2% inflation per year until 2012; settle for 5.7% will yield $339,168,430.55. That's minus the $670M #4-post mentioned.
Heck ya I'll take the deal. Oh should I have factor in the EBITA? Ya, I'm a dork, bored at work on Friday.
BS, say "No" and "Hell No" to the deal. Don't encourage these Patent Trolls. Call PTO to the mat to get their sh*t together.
Sales in fiscal 2004 were $1.3B. Making some basic assumptions of growth slowing from their current rate then that 5.7% comes out to be around $1.5B.
Assuming conservative growth RIM is looking at somewhere in the neighbourhood of 1.2B to 1.4B between now and 2012 in royalties to NTP. Since yearly sales were 1.35B last year, not the 610m reported. Thank god I live in Canada if they don't pay!
You don't get it. RIM has big plans for the technology. They want to push it's use down to the average Joe, where the number of people using the service are so huge that the $450M number would look like chump change.
That is just what RIM would be (a chump) if they gave into NTP. Let'em fight to the death.
I'd guestimate $280 million. That doesn't make sense unless you add the $670 million cash settlement to it. And remember, they're asking for it UP FRONT. It looks like NTP has RIM by the funny-sack on this one and they're squeezing pretty tight.
I really do not understand how NTP can be losing every single patent appeal and still be holding a gun to RIM's head. How can you get an injunction in order to enforce an invalid patent?
When taking RIMs device revenues (doesn't cover their service/server revenues) into account for the math, remember NTP's patent is only valid in the US. Devices sold overseas are not subject to NTP's patent holdings. About 75% of RIM's devices are sold in the US, so only about 75% of their device revenue is subject to the patent.
Re: injunction for invalid patent
Anyone else think that if this was an American company the judge wouldn't have made this decision? The government isnt worried. Theyve already said that their blackberries will continue to work. Maybe someone in the US Gov is thinking long term about how theyd rather an American company was collecting these millions in revenues.
Hmmm... Doesn't anyone think now that BB has some less expensive competition(MS WM5)those PROjected numbers may be wrong? Letting alone all the new Johnie on the spots.
42
If I was RIM I'd just close up shop. No notice. No nothing. Too bad so sad for all those who depend on BBerry. Maybe it would bring the stupidity of patent law to the forefront when a segment of feds lose their BBerries. Not to mention the rest of the known world that uses them as well.
the CEO of NTP already said that RIMM made an offer but it was rejected. No settlement in site.
Well, if the actual sales are $610M today, and you expect 10% sales growth, that means that you have a total of $6,975M in total sales. The royalty payment would be $397M. However, ince you are taking 5.7% of sales today, you need to convert those to present value. Assuming a 3% inflation rate, you end up with $360.8M in present dollars.
If the sales number is really $1,300M, then I would adjust the growth rate down a bit to 8%. The same set of assumptions apply, and you end up with a $716M royalty payment in today's dollars.
If they go this route, the debate between the two companies will be around growth rates, inflation rates, and whether all of the sales are considered to be covered by the royalty payments.
All of you are being too conservative with your sales growth estimates. RIM's revenues grew over 127% between 2004 and 2005. Assuming a declining growth rate from this point onwards of 75%, 50%, 25%, 15%, 10%, 10%, 10% RIM would be on the hook for over $2 billion CAD.
where do they come with this 5.7%...
damn number crunchers, i suppose... they have already figured this out...by end of the deal, if such is brokered, given number of blackberry users and their previous year's earning, both company will profit at the end...
lets just hope they don't jack up the price and give some wack reason to do so...
I wonder if they could just file for bankruptcy or make some legal manouevers to make NTP go away? Not saying I condone it, just wondering what you top law exeperts out there think <-- hah.
Hmmm... Doesn't anyone think now that BB has some less expensive competition(MS WM5)those PROjected numbers may be wrong? Letting alone all the new Johnie on the spots.
RIM isn't in any financial risk from this patent dispute. Their balance sheet is very healthy with over $1.6 billion in liquid assets. Considering their significant growth and improvement in cash generation year after year they could easily absorb any such settlement in short period. The only real issue is the enormous thud the deal would make when it hit the books.
Assuming a conservative 15% growth annually.
Year Est. Rim Revenue - - 5.7% of Sales
2005 $703,800,000.00 - - $40,116,600.00
2006 $809,370,000.00 - - $46,134,090.00
2007 $930,775,500.00 - - $53,054,203.50
2008 $1,070,391,825.00 - - $61,012,334.03
2009 $1,230,950,598.75 - - $70,164,184.13
2010 $1,415,593,188.56 - - $80,688,811.75
2011 $1,627,932,166.85 - - $92,792,133.51
2012 $1,872,121,991.87 - - $106,710,953.54
Total NTP Revenu after 6 years $550,673,310.45
Aren't in any financial risk? Tell that to people who own the stock and are watching it fall daily.
Why doesn't RIM buy NTP and get the patents and end this thing?
Well the Wall street journal says at 5.7% and through 2012 based off current projections it would cost RIM $900 million. I ma not sure if that is the present value of the money or the actual cash amount over time....
Velcro dart estimate: The lesser of a) original settlement offer squared or b) Federal Deficit Balance on the date NTP initiated this greedy nonsense, less 35% to NTP's attorneys.
RIM's stock symbol is RIMM. It's revenues for the most recent fiscal year were about $1.71 billion (check quote.yahoo.com, for example, for info). Assuming 5% growth, and assuming years 2005-2012 inclusive, this would be about $16.3 billion in revenue. 5.7% of that would be about $931 million.
$900 million, according to an estimate by Merrill Lynch.
NTP isn't publicly held, so there's no way you could do a hostile takeover.
And yeah, patent holding companies are LAME.
I am still pondering the foolishness of allowing those who hold patents to essential items like Tamiflu to dictate how little is produced for the USA when our country can be devastated by a H5N1 pandemic. A patent holding company is in a similar position to harm the USA by killing RIM which would interfere with the operation of many US agencies. There is something intrinsically wrong with out system of laws in that incredible harm can come from their unreasonable narrow minded application. I am waiting to hear that some one has patented access to fresh air in the US!
The longer this matter drags out, the more publicity it gets, and the more people will view RIM as being obtuse. Last time I checked, reputation was still a key factor in running a business.
$36.48 = $36.9 MILLION!
I wonder since blackberry's are used by most US government agencies, including homeland security ... would the risk of loosing this communication service be of national concern. Should/would the Gov step in at some point to resolve/influence the decision in favor of RIM?
#41 from my understanding government accounts would not be terminated if the "black out" actually did happen.
I own the patent to fresh air in the US. Just search for patent #643843846623