Can Nortel Survive as a Patent Business?

According to Rethink Wireless, Nortel may still have a game plan to survive Chapter XI and preserve its brand and a couple of business activities.

Most of Nortel's valuable wireless patent portfolio was excluded from the sale of LTE and CDMA businesses to Ericsson, This could arguably become the basis of a much smaller, but profitable, business focused mainly on licensing. This is only dependant on whether Nortel can raise sufficient funds from the sale of its other businesses to pay off creditors to the satisfaction of the US and Canadian bankruptcy courts. Avaya is currently looking at buying Nortel's enterprise unit. Nortel apparently plans to keep back patents from the enterprise unit sale too.

The fact that most of the IPR was excluded from the Ericsson deal would also explain the interest of RIM. RIM could see the patents as giving it a headstart over larger rivals in creating LTE BlackBerry devices and services going forward, and may also welcome the boost to its licensing arsenal, both for future revenues and also as a defensive tactic. The company has always engaged in significant patent licensing (and litigation) activity in its core mobile email markets and could aim to increase its value and its ability to 'trade' IPR with rivals.

Confusing reports have been coming from Nortel attorneys over which patents Ericsson was acquiring - one said 125 of the total portfolio of 5,500, another said 600. Ericsson will also license other Nortel IPR. Based on Nortel's estimate that the patents could command a 1% royalty on every relevant LTE device sale in the years to come. JPMorgan recently made the calculation that the patents could be worth between $950m and $2.9bn.