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Just a regular guy trying to make some smart investments. Some risky, some safe. Win or lose never have "what if".
  • Numbers Don't Lie. Well Maybe This Time They Are... 7 comments
    Nov 7, 2012 9:30 AM | about stocks: VRNG

    about:VRNG

    I went to a pretty solid college when I was younger. I remember I first majored in Statistics and Mathematics only to end up with a degree in Physics. However, one of the things I enjoyed so much about math was the numbers always tell the story. Or as many of you have heard before, numbers do not lie. It's a funny thing to say, and if you take a step back usually when solving most issues the numbers involved can help you create or help you decide where to go. Make a story out of the numbers was always helpful to me when trying to solve many issues. Even today...

    What do I mean? Ask any divorce lawyer who looks at bank statements to see where the money is going. The client might lie, but the bank statements sure wont. Example? Ask the husband about a purchase at Victoria's Secret, then ask the wife if she received anything from her husband from Victoria's Secret (Maybe Mr. Steve Kim can attest to that). Ask any IRS audit specialist what they use to decide if someone lied on his or her tax return. So Mr. Taxfilier, tell me about this donation again... Lastly, ask any jury how they came up with damages and they too can show you where the story (the trial in this case) went.

    So the trial came and a victory for (NASDAQ:VRNG). Ok let's not all get excited just yet. Did everyone see the numbers awarded? If you did not let's take a look once again.

    1. AOL $7.9 Million

    2. IAC $6.6 Million

    3. Target $98,000

    4. Ganet $3,432

    5. And Google (drum roll please) $15.9 Million.

    Huh? Confused? This is what we waited for? I went from saying YES WE WON, to please stay halted the entire day. What happened to Show me the Money? As the stock was halted and my heart was beating in my throat, and I was holding and looking at all the pictures on my work desk of my kids and wife I began to say to myself I just want something fair. Not looking to destroy anyone, but give what is right to the original owner of what he invented. Just because a man did not turn a patent into a Mega Business, does not mean he should be penalized for life. That was my theory going into this Day 1. Oh, and the jury agreed.

    So then the awards came in. The first thing that came to mind was, impossible. The second thing that came to my mind was impossible. Then the third thing that came to my mind was IMPOSSIBLE! Why do I say impossible, well just from the surface and not digging into this with the sleeves rolled past my elbows, one has to immediately say, How is AOL on the hook for 50% of the total past damages of Google? You then have to follow that up with how in the world is IAC on the hook for almost 40% of the past damages from Google? If you look at the total damages, the bulk of the money in the kitty was well Google. Let's take a look at some of these calculations that were calculated by the jury pool first.

    1. AOL $22,693,517

    2. IAC $18,917,570

    3. TARGET $282,380

    4. GANET $12,348

    5. GOOGLE $451,190,903

    Take a good look at those numbers. Now take another look at the award given. Now take it one step further and break up that award and see how the total was calculated. Confused? I am!

    According to several people the numbers were calculated as follows:

    1. AOL $22,693,517 X 35% = $7,942,730

    2. IAC $18,917,570 X 35% = $6,621,149

    3. TARGET $282,380 X 35% = $98,833

    4. GANET $12,348 X 35% = $3,432

    5. GOOGLE $451,190,903 X 3.5% = 15,791,681

    Now I certainly cannot say that Jury made an error. Nor can I say 100% a mistake has happened. But I can certainly say why the sudden change in a calculation for Google? Can a Juror get a calculator up in this deliberation room please! Can a math error happen? Of course it can. Ask any trader about a fat finger trade and he can attest to it. Mistakes happen all the time. In fact, I could be mistaken here. However, I can certainly say to myself something is not making any sense. From past damages, how it is that Google received the smallest % of the past damage. Yes dollar figure they had the highest award to be given, but on the percentage side of things something seems off. It looks like Google's portion was equivalent to getting a ticket in the mail for running a red light. When it should have been, much more. Possibly $142 Million dollars more. I came up with $158 Million using the same formula. Did someone get confused? Am I confused?

    So after years of saying and hearing Number do not lie, I guess for now I would like to add to the quote. "Number do not lie, but someone possibly screwed up".

    Disclosure: I am long VRNG.

    Stocks: VRNG
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Comments (7)
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  • t2greenmt
    , contributor
    Comments (18) | Send Message
     
    I hope you are right, but could it be the other way? Maybe AOL, IAC, etc. should have been calculated at the 3.5%?
    7 Nov 2012, 09:53 AM Reply Like
  • onetimershot
    , contributor
    Comments (115) | Send Message
     
    Author’s reply » I thought about that also, The amounts being so small, wouldnt make a difference. The difference maker is if an error occured. I just want to know how the jury decided those numbers. if it is what is is no problem. but they dont match...
    7 Nov 2012, 10:00 AM Reply Like
  • t2greenmt
    , contributor
    Comments (18) | Send Message
     
    True. Thanks for you thoughts
    7 Nov 2012, 10:04 AM Reply Like
  • Chung Yen Wong
    , contributor
    Comments (62) | Send Message
     
    35% is to account for the past damage in the period as define by the laches, i.e. Sept 2011. The past damage is precisely accountable for the 35% of the 6 years that was originally sought after.
    7 Nov 2012, 10:18 AM Reply Like
  • onetimershot
    , contributor
    Comments (115) | Send Message
     
    Author’s reply » Yes i get that, so why a change in calculation for Google when applying it? Judge attached laches to all the defendants.
    7 Nov 2012, 10:23 AM Reply Like
  • sonicthoughts
    , contributor
    Comments (219) | Send Message
     
    not quite 35% unless they assumed revenue growth.
    7 Nov 2012, 02:00 PM Reply Like
  • sonicthoughts
    , contributor
    Comments (219) | Send Message
     
    I just don't understand how people are not amazed at a 3.5% royalty rate for GOOG on their core business. This can now apply to anyone who does web advertising. It's such a big victory - how could the stock be punished????
    7 Nov 2012, 02:01 PM Reply Like
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