Dr. John Faessel - On The Market
212-713-5793 onthemar@yahoo.com
RIDING THE DIGITAL REVOLUTION - Acacia
DIGITAL MEDIA TRANSMISSION TECHNOLOGY
Acacia Research (ACRI) @ $5.03 - market cap of $99 million - is soon, assuming an OK from an up-coming shareholder vote on December 11, to be dividing into 2 companies - Acacia Technologies, a company that holds a suite of important and valuable patents, and CombiMatrix Inc. who develops bio-chip technology.
I wrote about CombiMatrix on October 17th when (ACRI) was $3.71.
Today let's talk about Acacia Technologies - the recent S4 indicated they had $42 million in cash - with only 12 employees the cash hoard should last eight years or more - even with no money across the table.
Digitalization is upon us. Still not in its final stages but the die is cast.
It's - information everywhere - from your wireless video telephone to your camera - shot to the computer where available streaming media is now becoming pervasive. It is now the international data language of transactional commerce. Trillions of bits of digitalized data in a myriad of forms of video, television, games, music, radio transmitted thru optical fiber, phone line, cable, satellite and wireless feeding us internet, e-mail etc etc etc - the little buggers are everywhere. The Digital Revolution is upon us and Digital Media Transmission Technology reigns as a huge market.
At this point the market puts little heed into just a story but all major endeavors that straightaway attack new giant markets begin with much planning, organization, financial backing and management. Such is the case with Acacia Technologies. Keep in mind that (ACRI) has already collected $26 Million on their patents that relate to the FCC mandated television video and audio blanking technology commonly known as V-chip technology.
(ACRI) has a suite of 'pioneer' patents on the process of digital streaming that cover the transmission pathways that link; digitization, encryption & encoding, compression, storage, transmission, receiving and play-back. The patents, that date back to filing date in January 1991, are importantly 'open continuation' i.e. - able to be added to - that prevents design arounds.
These patents consist of - 5 U.S. & 17 international patents - 137 claims.
Some needed history. Prior to the above filing, walk on water, Sarnoff Research Center, then a subsidiary of RCA, (now GE), executed a thorough literature and prior art search of existing patents for Greenwich Information Technologies the originators of the patents. Sarnoff found no 'prior art'.
Con`t on Part #2:
This is also a grabber - In 1994 Bell Atlantic, (now Verizon Wireless) did a pilot program of video on demand, 'VOD', over phone lines. Bell Labs researched the patents for them and found that Greenwich was the beneficial owner of the key patents. Bell Atlantic then made a royalty agreement for an option on the VOD patents, whereupon subsequent and substantial payments were paid to Greenwich.
More good stuff. Back a ways, in 1996, (ACRI) buys 30% of Greenwich, then the remaining portion last year. That's after asking 4 major law firms to try to bust the patents. The story goes that there was unanimous opinion after months of extensive research - bullet proof - that indeed the patents encompassed the process involved in the method of digital streaming, audio and VOD. They also found nothing prior in the literature and the patents were 'cited' over 200 times.
Now ladle on and consider the spectacular success of the Gemstar (GMST) patent licensing program. The stock flew from $2.00 to $100 on the back of their single patent on set-top boxes. Importantly 4 of the Gemstar attorneys / executives who orchestrated that undertaking are now at (ACRI) readying to enforce their patents. Scuttlebutt is that they think these patents are way stronger than the one they successfully enforced and licensed for Gemstar.
*At one point Gemstar wore a market cap of $9 Billion.
Significant here is the fact that (ACRI) views this endeavor of targeting the top 150 infringers as - setting up of strategic partnerships - rather than an aggressive adversarial pursuit of giant lump sum payments. I.e. A penny or so on this application, a penny or so on the next one; and on and on, thru the complex of the associated technological pathways involved. These small nominal fees would not affect their 'partners' business models yet they add up to a cumulative royalty stream in the mega millions. This is the strategy that was used so effectively by Gemstar. Word is that the Acacia team is already knocking on doors in the early development of licensing / royalty agreements. Their objective is to become a very lean money making machine with exceptional 95% + gross margins and low expenses. With a head count at Acacia Technologies of only 12, you get the 'drift' and the potential bonanza.
Potential partners / licensees are from these sectors: Media, Cable, Telephone, Satellite, Streaming providers, Movie studios, Computer, Internet, Music companies, Games, Wireless and Hotels.
Potential corporate partners / licensees, to name just a few: Microsoft, Intel, AOL Time Warner, Disney, Universal, Apple, Sony, Tivo, Replay, Direct TV, Akami, On Command, AT&T, Comcast and let's not forget Verizon Wireless. Of note - many of these are Gemstar licensees.
So, the 'new' Acacia Technologies with $42 million in cash is fielding an all-star team of proven winners holding a fist full of literature and prior art aces and they're now pursuing 100's of the richest names on the planet to enforce patents that cover the A to Z transmission pathways of digital streaming, plus - audio and video on demand. The potential is extraordinary in my opinion. |
