Is Microsoft (MSFT) Overpaying for AOL (AOL) Patents? Maybe...

April 9, 2012 9:04 AM EDT
According to a release from AOL (Nasdaq: AOL) and Microsoft (Nasdaq: MSFT) early Monday, Microsoft is going to buy about 800 patents from AOL in a deal valued at $1.056 billion. This amounts to an average $1.32 million per patent.

Is Microsoft paying too much for the intellectual property? Last year, Google (Nasdaq: GOOG) announced a $12.5 billion bid for one-time mobile OEM leader Motorola Mobility (NYSE: MMI) -- a deal which is still undergoing federal antitrust scrutiny. As reported late last week, one Google exec admitted the company was doing the deal more for the IP than the equipment-making potential.

Numbers show Motorola has about 12,500 patents in force, with 7,500 pending applications. Evaluating just the legal patents and Google is getting Motorola for about $1 million per patent. Tossing in the pending applications and that number drops dramatically to $625,000 per patent, about half what Microsoft is paying.

This is just one example, but something shareholders might want to take into consideration Monday. AOL shareholders might already be "getting it," with AOL stock up over 30 percent early.

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