subject: Q4 Patent Play Stocks: Many Settlements Take Shape in Q4 [print this page] Traders backtest for cyclicality and one pattern which emerges is related to Patent Lawsuits and settlement cycles, we noticed after writing about many of these names in 2010 that they are a decent place to focus and keep an eye on as we head into Q4.
Recently David Sterman "StreetAuthority" wrote an excellent article titled "3 Stocks with Potentially Lucrative Patents". In his story he talked about three companies he believed had patents that could prove to be valuable when enforced through legal efforts, not limited to settlements and or licensing fee's. Those companies were VirnetX Holdings (AMEX: VHC), Rambus (Nasdaq: RMBS) and InterDigital (Nasdaq: IDCC)
In his article he wrote, "When communications software firm VirnetX Holdings (AMEX: VHC) released quarterly results last Monday, investors may have thought the company's press release had a glaring error. Sales, which had never exceeded $21,000 in any prior quarter, suddenly exploded to $200 million. It was no misprint. VirnetX finally got a nice payoff after several years of lawsuits regarding patent infringements.
Other companies that sue to get royalties are also hopeful for similar windfalls. And when these companies prevail, profits can grow quickly, as patent and royalty income often flow straight to the bottom line.
So how can investors profit from companies with potentially lucrative patents? I've uncovered three companies sitting on potential gold mines in terms of their intellectual property."
David went on to espouse the virtues of all three companies IP, but of particular interest to me was VHC because of its relevance to the massive mobile movement which has attracted the recent full attention of Google (Nasdaq: GOOG), Yahoo (Nasdaq: YHOO), Apple computer (Nasdaq:AAPL) and many others. Everywhere you turn, articles abound about the proliferation of mobile and how its growth is projected to out pace that of the PC movement itself.
