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Thursday, October 18, 2012

Should Google Inc (GOOG) Be WORRIED About This Tiny Tech Company? $VRNG

Should Google Inc (GOOG) Be WORRIED About This Tiny Tech Company?

The lawsuit alleges that Google has violated Lycos’ search and search advertising patents that Vringo owns. Lycos is one of the pioneer search engine companies from the mid-1990s.
However, just as Google Inc (NASDAQ:GOOG) is seeing pressure from Vringo, could Microsoft Corporation (NASDAQ:MSFT) orYahoo! Inc. (NASDAQ:YHOO) be next? There has been speculation that perhaps Microsoft or Yahoo should buy Vringo and use the patents to sue Google directly. However, neither company has shown interest. On the other hand, Google could potentially purchase the company and use the patents against Microsoft or Yahoo. Yet, none of these things have materialized and Google has chosen to not even settle, leading us to believe that perhaps there is more smoke than fire at this point.
Google Inc (NASDAQ:GOOG) continues to exert its dominance in the search market, owning over 66% of the market per comScore’s latest market share numbers. Microsoft’s Bing moved up to 15% and Yahoo came in at 13%. Worth noting is that if any issues arises concerning Microsoft’s or Yahoo’s search methods, ramifications can very well fall back on Microsoft, at its software powers the Yahoo search engine per a partnership the companies entered into in 2009.
The actual damages sought by Vringo are unknown, but estimates range from $300 million to $700 million and a few beyond that, in the billions. These possible damage awards, albeit small in comparison to Google’s $43 billion in cash and short-term investments as of 2Q, are massive numbers compared to Vringo’s market cap. Vringo could really use a big break and many investors feel this is their big ticket, as the company has lost at least $6 million in each of the last four years. However, for Google Inc (NASDAQ:GOOG) not to spend the relatively small amount of cash to snatch the company up with an outright acquisition leads us to believe that Google wants to make an example out of Vringo for future patent trolls.
Vringo’s recent addition of 500 plus patents from Nokia Corporation (NYSE:NOK) brings an interesting dynamic to the company beyond the search market patents it is putting to use against Google—see more about why Google and Apple should team up against Vringo. Nokia has struggled for the last five years as it has seen its position in the mobile phone market dwindle. The company has a lot riding on its Lumia series, which runs Microsoft’s Windows 8 mobile operating system. Nokia sold off the small patent portfolio to Vringo in August in an effort to raise cash and re-invest in its core business, mobile phones. The deal netted Nokia $22 million and affords the company a portion of any future profits that Vringo receives in patent cases. Vringo recently raised over $30 million for acquisition of the Nokia patents, but the big gamble for Vringo is that if they lose the Google Inc (NASDAQ:GOOG) lawsuit they will be hard pressed to raise capital to fund other litigation battles.

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