Jacksonville based ParkerVision (PRKR) owns over 200 patents related to semiconductor circuits for wireless devices. Its website describes its technology as relating to both 3G and 4G LTE networks and a June 1, 2012, ipCapitalGroup presentation states, "Even though obtaining patents strains ParkerVision's limited resources, ParkerVision has positioned its patent portfolio alongside and above giants of industry," such as Broadcom (BRCM), Intel (INTC) and Nokia (NOK).
ParkerVision is currently involved in a lawsuit asserting six of its patents against Qualcomm (QCOM). ParkerVision filed that suit in federal court in Jacksonville last year (July 2011) and is scheduled to go to trial next year (August 2013). The court is currently considering the parties' arguments regarding how the patents should be construed, which means the judge is in the process of interpreting the words in the patents to figure out what precisely they cover.
While the Qualcomm suit proceeds, last month ParkerVision announced it had retained the law firm of Wilson Sonsini to represent it. The news didn't move the stock up at all. In fact, the stock price actually dropped 15% over the two days after the announcement and hasn't rebounded since. This has completely boggled my mind. Here's why.
Wilson Sonsini is one of the hands down most reputable law firms in Silicon Valley, having done the IPO's of Apple (AAPL) and Google (GOOG) and Tesla Motors (TSLA) and ... (I could go on and on). On its recent Second Quarter 2012 Conference Call (unofficial transcript here), ParkerVision CEO Jeff Parker identified Larry Sonsini as the specific attorney at the firm helping them. Yes, Larry Sonsini is the Sonsini in the firm name Wilson Sonsini, and he has been a trusted advisor to Steve Jobs amongst other Valley luminaries. In short, Mr. Sonsini has been called a Kingmaker, and I couldn't agree more.
While Wilson Sonsini the firm does patent litigation, it is mostly known for its corporate work, including IPO's, M&A, licensing, etc. I've never heard of Mr. Sonsini ever stepping into a court room and, indeed, he isn't even listed as an Intellectual Property Litigation attorney at the firm. His firm bio lists his practice areas as, "Corporate Finance, Corporate Law & Governance, Entrepreneurial Services, Mergers & Acquisitions, Private Equity and Venture Capital."
While the press release issued by ParkerVision on July 31 about the retention of Wilson Sonsini said they were retained to represent the company "in matters of technology licensing, intellectual property transactions, joint ventures and strategic alliances, mergers and acquisition,"I think the latter of those things is perhaps the most likely that matches up with Mr. Sonsini's experience and expertise (and his contacts). I just can't see Mr. Sonsini being hired to negotiate a trivial patent license agreement or two. It just doesn't seem that'd be worth his time. This is a man who does big, often billion dollar, deals.
ParkerVision's CEO gave more color on the Wilson Sonsini relationship on the August 15 2012Q2 call, saying:
Walt, let me clarify. The Wilson Sonsini relationship has nothing to do with our IP litigation. They are exclusively working with us. Let me maybe provide this visibility, if you look at our patent portfolio we have over 200 patents now. We've asserted, against Qualcomm, six patents. That's less than three percent of our entire portfolio. We see a lot of opportunity to commercialize our technologies off of the strength of the technologies themselves and the portfolio that protects those. Whether it's licensing, joint ventures, there are all kinds of possibilities that we're exploring. It's in that business development sense that we engage with Wilson Sonsini and that Larry Sonsini will be helping us.
As goes without saying, but I'll say it anyways, I have absolutely no information beyond what's been said publicly by the company about the help they have asked Mr. Sonsini to provide them or what he might be doing for them. But, I won't be surprised if he's been specifically asked to help the company see how much it could get if it wanted to sell itself, or at least form some serious relationship with a Silicon Valley heavyweight.
Remember, ParkerVision owns a large portfolio of patents relating to semiconductor circuits in wireless devices, something at least both Apple and Google have a lot of their business built around. And who has a long relationship with both Apple and Google, beginning before either was even a public company? That's right, the exact man ParkerVision has now hired, Mr. Sonsini. Underlying this admittedly wild speculation is the following statement from Mr. Parker on the August 15 call:
What's exciting to us about working, not just with the Wilson Sonsini team, the very seasoned, accomplished team in the technology sector, but with Larry as well, is these guys have a great deal of experience in sorting through how to be a deal...Larry and his team are deal makers. How do you get things done?
What they've seen in our technologies and our supporting IP is that we're in a space that has a lot of need for this technology and they have reach to many companies that we believe and they believe will be very interested in working with us in a variety of business development activities.
Did you notice the phrase, "... they have reach to many companies ..."? To me that means Mr. Sonsini gets people to answer his calls, something that ParkerVision alone would probably have a much harder time doing. My hunch tells me Mr. Sonsini has agreed to approach his contacts in the Valley to discuss ParkerVision and what it has to offer. If anyone seems interested, he gets to broker the deal. Apple, Google and even Microsoft (MSFT) all have plenty of cash to spend and if they see ParkerVision's patents as valuable to assert against each other, or at least to keep out of the hands of the others, then we could actually see a bidding war break out between them, as we did in the Nortel patent auction.
Even if it does not get acquired, ParkerVision still seems undervalued at today's market cap of $170M. This past week's Apple v Samsung patent infringment verdict of over $1B shows how much just a couple of patents can be worth in the wireless devices space and while I haven't yet reviewed the ParkerVision v Qualcomm lawsuit in detail, if it has any merit, it could easily be worth more than $170M itself. Notably, ParkerVision is represented in the suit by the law firm McKool Smith, which has received verdicts of $156M, $106M, and $290M in recent years. And this doesn't take into account the value the same six patents being asserted against Qualcomm could have if asserted against other companies, or the value of ParkerVision's other 200 patents.
In short, I won't be surprised if ParkerVision enters into a sizable corporate transaction in the coming months, and I definitely won't be surprised if the other party to the deal is a technology heavyweight. Heck, even Qualcomm is a potential acquirer, as that would be one way for them to stop the current lawsuit ParkerVision has going against them. But, to be sure, I could just as easily be completely wrong here. Only time will tell.
(This content was originally issued as a Ravicher Report on August 23, 2012. It is now being made available for free to the public for the first time here.)
Disclosure: I am long PRKR.