Intel Buys 1,700 Technology Patents From InterDigital
June 20, 2012

Intel Buys 1,700 Technology Patents From InterDigital

Lee Rannals for

Intel announced on Monday that it would be paying InterDigital $375 million for 1,700 technology patents.

The patents being purchased by the chip maker involve innovations for 3G and long-term evolution (LTE) technology, both companies said in a statement.

“This transaction, which involves a small portion of our overall patent portfolio, marks an important milestone of InterDigital´s stated strategy of expanding the monetization of its large and growing intellectual property portfolio,” Scott McQuilkin, senior executive vice president for strategy and finance at InterDigital, said in the statement.

InterDigital has been trying to sell off wireless patents for about a year, hiring Evercore Partners and Barclays Capital to try and sell the whole company.

The company wound up disappointed back in January when it couldn't find a buyer, but it insisted it would continue to try and sell off its patents.

"This should reduce some of the executional overhang that was on the stock. The market was worried they wouldn't meet this milestone," M Partners analyst Ron Shuttleworth told Reuters. "They lost a lot of credibility once they had to cancel the process."

InterDigital, which was founded in the 1970s, has worked on ways to send calls and data through wireless networks since it started. The company holds patents in a variety of technologies, as well as some that are starting to be initialized in operator networks.

The move by Intel brings the company closer to extending its business beyond its current foothold in the chip-market and into the smartphone world.

Intel's first smartphone, known as the San Diego, launched back in early June through U.K.'s Everything Everywhere network. The device features an Intel single-core Atom Z2460 processor.

Bernstein analyst Stacy Rasgon said in a research note after the purchase that the deal should fit into Intel's smartphone strategy.

"While we believe these new patents acquired from InterDigital should further bolster their position, we do not expect any changes to their wireless strategy as a result of the purchase," Rasgon wrote.

She said the $220,000 price paid for each patent by Intel was much lower than other recent patent acquisitions, citing Nortel's $4.5 billion patent sale and Google's $12.5 billion Motorola Mobility patent purchase as examples.

InterDigital sales jumped up 27 percent at the close of Monday's trading once the deal was announced. The price increase was the largest it has seen since July 20, 2011.

The company also announced on Monday that it would be doubling its share buyback authorization, going from $100 million to $200 million.