Vringo (UNKNOWN:VRNG.DL) is shaking its patent-rich moneymakers.
Shares of the mobile-app developer soared 20% on Monday after an analyst upgrade and favorable news in its legal battle against Google (NASDAQ:GOOGL).
Let's tackle the courtroom fisticuffs first. The market's been generally skeptical about the quality of Vringo's intellectual capital. It agreed to pay a pittance in March to acquire Innovate/Protect, a holding company consisting primarily of eight potentially promising search-related patents from Lycos.
If the patents were worth more than Vringo's eight-figure price tag, surely Google or another major player in search would've raised a higher bidding card. However, now that a court is ordering Vringo to enter into negotiations with Google, it's starting to seem possible that a material payday may be coming sooner rather than later.
Maxim Group analyst John Tinker -- who has a buy rating on Vringo -- is raising his price target from $6.50 to $10 ahead of a potential settlement.
According to Tinker, Vringo's seeking roughly $696 million plus interest for historical licensing and could be asking for another $700 million in future royalties. That's a lot of money for a company that began the week valued at a little more than $400 million based on his calculations of 92.3 million effective shares outstanding.
Vringo may be a patent troll -- assembling a portfolio of search and mobile patents -- but it may soon be a rich patent troll. Tinker believes that Google will either come to terms on a settlement with Vringo or possibly snap up Vringo outright, using the patents as weapons against Microsoft (NASDAQ:MSFT). The software giant has used patents to bludgeon Google in the past, so this would be sweet revenge.
Mark Cuban turned heads earlier this year when he acquired a 7.4% stake in Vringo. It seemed like an ironic purchase at the time. Cuban has always been a vocal critic of patent trolls, and this move was seen as a surprising hedge.
We'll see how this all plays out soon enough. Google doesn't buckle easily, but the last thing Big G wants to do is come up short in a public battle when it can just settle on the side.
Rick Aristotle Munarriz has no positions in the stocks mentioned above. The Motley Fool owns shares of Google and Microsoft. Motley Fool newsletter services recommend Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.