Yahoo could be sitting on a $4B patent gold mine

Yahoo CEO Marissa Mayer Photo: Getty Images

Yahoo is sitting on a trove of technology patents that could be worth as much as $4 billion, The Post has learned.
The ailing Internet giant, which launched an auction in February to sell its core business, could reap between $3 billion and $4 billion just from the sale of its patent portfolio, according to intellectual property experts.
The company holds roughly 6,000 patents spanning a range of technologies including mobile messaging, data mining and behavioral ad targeting, sources said.
“Yahoo has a lot of fantastic patents that can be used on the enterprise side. There are Yahoo patents that cover Yahoo business, but there’s a lot more that cover businesses they’re not in,” said one expert who has valued the portfolio.
The potential patent gold mine is also attractive to bidders involved in the auction for the company. Yahoo has set a deadline of April 11 to submit preliminary bids for its Web business and Asian assets.
“At least five bidders have been making calls to try to value the IP [intellectual property],” a source close to the sales process told The Post.
“Private equity firms have been making calls,” the source added. “They know they’re sitting on something big. They do not want people to know about this.”
So far, none of the bidders has sought to buy just the patent portfolio. But several rival tech outfits, including Microsoft, Salesforce, Amazon and LinkedIn, have been following the process closely, the source said.
Yahoo’s chief financial officer, Ken Goldman, said in March that the company would sell non-core assets, including real estate and patents, valued at between $1 billion and $3 billion.
But it’s unclear which patents Yahoo would sell as part of a non-core deal and which it might retain as part of the sale of the core business — making Yahoo’s own evaluation of its patents fuzzy.
“Yahoo estimated the value of real estate and patents as worth between $1 billion to $3 billion but under ‘responsible monetization of IP,’” said a source. “That’s not the same thing as aggressive ‘commercial monetization.'”
CEO Marissa Mayer may be loath to exploit Yahoo’s patents. As an ex-Googler, she could embrace the search giant’s love of a wide-open Internet and hatred for “patent trolls” and others that have aggressively sought to reinforce intellectual property rights.
In March 2012, under then-CEO Scott Thompson, Yahoo sued Facebook for patent infringement in a bid to seek more revenue. The two settled just a few months later, shortly after Thompson was ousted in May.
There are only two slides in Yahoo’s financial deck for potential bidders that address patent ownership — despite considerable excitement about the exploitation of Yahoo’s assets, said one source.
In April 2012, AOL Chief Executive Tim Armstrong sold patents to Microsoft for $1.1 billion, sparking a 43 percent rally in the shares.
At the time, activist investor Starboard Value had been pushing for a full valuation of AOL’s patent ownership. Now, Starboard is pushing for Yahoo to sell its core business and has launched a proxy fight to replace the company’s entire board.
Meanwhile, telecom giant Verizon, which now owns AOL, is considered the front-runner to buy Yahoo’s Web assets. Armstong, an ex-Googler as well, still runs AOL.
Before Mayer took the reins in July 2012, one Silicon Valley law firm prepared a report that same year valuing Yahoo’s patent assets at as much as $10 billion, according to one IP expert.
Yahoo has sold $600 million worth of patents over the last three years, according to reports. A spokesman wasn’t immediately able to comment.