NEW
YORK (AP)—AOL Inc. shares surged Monday to their highest level in more
than a year after it said it has agreed to sell 800 of its patents and
license others to Microsoft Corp. for about $1.06 billion in cash.
The
New York-based Web site developer and Internet access company said it
plans to return some of the sale proceeds to its shareholders. After the
sale, AOL should have about $15 per share of cash on hand, it said.
AOL
shares jumped $7.78, or 43%, to $26.20 in morning trading, adding about
$750 million to its market capitalization. Microsoft shares slipped 37
cents, or 1.1%, to $31.15 in morning trading.
In
February, one of AOL’s largest shareholders, an investment firm, said
it would nominate candidates for the company’s board because it wasn’t
doing enough to make money from its patents. In response, the company
said it had already begun to look at ways to unlock patent value.
Patents
have become a hot commodity in the high-tech industry in the last few
years. They’re useful both for attack—for suing competitors—and for
defense—for warding off lawsuits with threats of countersuits. Software
patents can have broad applications, and thousands of patents can apply
to a complicated product like a cellphone. Google Inc. is buying phone
maker Motorola Mobility Holdings Inc. for $12.5 billion to get hold of
its patents.
After
the sale, AOL said it will still hold over 300 patents and applications
covering a variety of core and strategic technologies including
advertising, search, content generation, social networking, mapping,
multimedia, and security among others.
AOL also received a license to the patents being sold to Redmond, Wash.-based Microsoft Corp.
“The
combined sale and licensing arrangement unlocks current dollar value
for our shareholders and enables AOL to continue to aggressively execute
on our strategy to create long-term shareholder value,” AOL Chairman
and CEO Tim Armstrong said in a statement.
AOL
said it will determine the best way to distribute a “significant
portion” of the sale proceeds to shareholders before the sale closes,
which is expected to happen by the end of this year.
AOL
owns news sites like Huffington Post, Engadget and Techcrunch, but
still makes much of its money by providing dial-up Internet access.
Source: The Associated Press
