Vringo's 2012 in Review

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Vringo (NASDAQ: VRNG  ) has had an extremely colorful year, full of major milestones from both the product side and the patent litigation side. One of the best ways to understand where a company is going is to take a retrospective look at where it has come from. The company describes itself as "a provider of software platforms for mobile social and video applications" and continues: "With its award-winning video ringtone application and other mobile software platforms -- including Facetones, Video Remix, and Fan Loyalty -- Vringo transforms the basic act of making and receiving mobile phone calls into a highly visual, social experience."

Let's take a look at how this company has behaved over the past year.

Jan. 11: The company announced that its Facetone product was available on Apple's (NASDAQ: AAPL  ) iPhone. The product syncs with your Facebook (NASDAQ: FB  ) account to create a video mashup of your contacts' Facebook pictures that acts as a ringtone display when that contact calls.

Feb. 6: Vringo announced that its Facetone app had surpassed 1 million downloads. Company President Andrew Perlman said: "The Facetone application has quickly become popular with users around the world, and the excitement of enhancing phone calls and texts with pictures and social content from sites such as Facebook is spreading rapidly. We believe this new type of interaction will help define the future of social mobile experiences."

Feb. 15: The company announced that it had reached an agreement with Facebook that would resolve any potential disputes over the use of various copyrighted material or marks.

March 14: Vringo and Innovate/Protect announced that the two companies had entered a definitive agreement to merge. The purpose of the alliance was to "substantially increase its intellectual property portfolio, add significant talent in technological innovation, and be positioned to enhance its opportunities for revenue generation through the monetization of the combined company's assets."

May 10: The Facetone app for Google's (NASDAQ: GOOGL  ) Android received a favorable review from PC Magazine. The Vringo press release quoted the review: "The Facetones app for Android gives users more reasons to call friends and family by displaying the caller's most recent Facebook images."

Aug. 9: Vringo announced that it had entered into a patent purchase agreement with Nokia (NYSE: NOK  ) to purchase more than 500 patents. The transaction included 109 U.S.-based patents and applications and included "technologies relating to cellular infrastructure, including communication management, data and signal transmission, mobility management, radio resources management, and services."

Oct. 8: Vringo filed a patent infringement case against the U.K. subsidiary of ZTE. The suit alleged that ZTE had failed to receive proper licenses to use technologies covered by various ZTE patents.

Nov. 6: The company announced that its Innovate/Protect subsidiary had won its patent suit against AOL and Google. The jury found that Vringo's asserted claims were valid and ordered past damages in the collective amount of $30 million. The company had been hoping to be awarded as much as $696 million, but it was granted the future royalty compensation it had been seeking; the company is to receive a "running royalty" at a rate of 3.5%.

Dec. 5: The company announced that it had expanded it suits against ZTE to include additional claims and jurisdictions. The company said: "This second U.K. case, following on from a first lawsuit, filed in the U.K. in October, and a related case filed in the District Court of Mannheim, Germany, in November, is part of Vringo's licensing and enforcement program."

Overall, the company has had a busy and defining year on many fronts. The dual-pronged approach of providing certain technologies and running a comprehensive patent enforcement program should give the company multiple revenue streams.

The stock's year in review
Vringo has become a favorite trading vehicle for many, boasting average daily volume of nearly 8 million shares on a market capitalization of under $250 million. A part of the stock's popularity is certainly driven by the company it keeps, even if that company is largely in courtrooms these days. The fact that the stock is up nearly 230% so far this year is not likely to hurt the interest traders have in the stock, either. The stock has traded as low as $0.68 per share and as high as $5.73, currently trading around $3 per share.

Moving forward, the next likely catalyst for the stock is the resolution of the ZTE litigation. It's likely that the company's emerging status as a "patent troll" or "patent litigation enforcement company" (PLEC) is hurting the stock's appeal. As you can see from the outcome of the company's case against AOL and Google, rewards can be very hard to predict. If the company can reach a sizable settlement with ZTE, however, it will probably cause a significant price spike. Given the level of uncertainty, the company is more a short-term trading vehicle or a speculative bet, rather than a long-term investment option.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 16, 2012, at 2:21 PM, RHDNYC wrote:

    "As you can see from the outcome of the company's case against AOL and Google, rewards can be very hard to predict. If the company can reach a sizable settlement with ZTE, however, it will probably cause a significant price spike. Given the level of uncertainty, the company is more a short-term trading vehicle or a speculative bet, rather than a long-term investment option."

    I fully realize the confines of a summary article, but you have materially mischaracterized the "state of play" in the VRNG/GOOG litigation. You presented the Nov6 jury verdict as conclusory and minimal; even cursory analysis shows that Judge Jackson has not in fact issued a final ruling, there are substantive issues to be addressed in the near term, and the final outcome may well be much more financially beneficial to VRNG than stated in this article.

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