Yasch22 wrote: "Licensing & Other" revenue reached a zenith in FY2020: $349 million. The first three quarters reached amazing heights at $79m, $76, and $81, capped off by a spectacular Q4 of $112m.
Part of the disappointment of FY2021 was that Licensing/Other fell to $272m. Generally speaking, analysts and investors ended up with the impression that the Licensing/IP business would always have these characteristics:
(a) Serious "lumpiness"
(b) Steady-state basic revenue of roughly $250m/year
(c) No specific revelations about which streams within the division were producting this or that amounts of revenue.
I think we can shed a lot of light on the business, and ultimately on the patent sale, by listing the different revenue streams that we've seen over the past six years.
1. Licensing deal with Emtek Indonesia to administer BBM. $207.5m for 6 years, signed in June 2016. Terminated I believe at end of FY2020 (February 2020), which is one of the reasons BB had such huge revenue in Q4/20.
2. Phone licensing deals for companies to build BB-branded phones. TCL of China, Merah Putih of Indonesia, Optiemus Infracom of India. TCL and MP have backed out of the game, though I think Optiemus is still partially in it. ??
-- I'm wondering too if all of the contracts with these guys were terminated about three quarters ago, which helps explain the main part of the drop-off in revenue from FY/21 to the first three quarters of this year.
-- In other words, the low results so far this year are not just due to the IP sale, but possibly to the final winding down with TCL, which included a severance payment (?) from TCL.
3. White label licensing deals for BB telephony. There were (still are?) 3 or 4 companies, like Punkt, who build their own branded phones but use BB security inside.
See this link. 4. Ongoing series of wins in court or out of court for use of intellectual property. E.g. the lawsuit against BLU in 2017, where the settlement amount was hidden by NDAs.
(a) Revenue paid in one upfront lump sum
vs
(b) Revenue paid in instalments over several years (Chen said a few years ago that most companies wanted to pay the whole amount and get the issue off their books, whereas BB wanted payments by instalments because that would be treated as "recurring" revenue. The street felt that only recurring revenue was valuable.
5. Patent sales: BB has made at least 4 or 5 smaller sales of patents, including the one last January to Huawei. In a couple of cases, BB has sold rights to market its patents to another company, or sold its winnings from a legal battle to another company (as when they sold on rights to the Avaya settlement to Whitebox Advisors in 2018).
6. Patent licensing.
(a) Teletry revenue. Teletry is run by Marconi Group to generate revenue for BB patents regarding telephone tech. Teletry is the broker or middleman for scores of different deals.
(b) Avanci: BB gets revenue by participating in a Marconi-run marketplace for patents relating to automotive tech. I'm not sure if the money from BB's participation in Avanci goes to the IoT division or to Licensing. Also, I have no idea what amounts are involved. Maybe no more than a few million per year.
(c) BB runs its own in-house team to hunt out unauthorized usage of the rest of its patents.
All in all, it may well be that the lion's share (50% or more) of licensing money in the four "glory years" -- FY/18 to FY/21 -- came from the deals for BBM and BB-Android phones (with security keys and physical keyboard, etc). We've come to believe that the patent portfolio itself was generating that baseline amount of $250m per year, but the core number (with Emtek, TCL etc. excluded fromt the picture) may have been closer to $100-150m per year.