AOL has decided to sell over 800 patents to Microsoft in a $1.1 million deal. Part of the deal includes non-exclusive rights to over 300 other advertising and technology patents as well.
There is no word on exactly why AOL is getting rid of the patents, but many believe it is under pressure to regain a foot hold in the internet business and earn better returns for its stockholders. Certainly the profits and licensing agreement will put more money bak into AOL's pockets, but how will they use the capital?
Apparently certain components of Netscape are also part of the AOL/Microsoft deal. AOL sold off aspects of Netscape which deal mainly with the internet, but there's no word about what exactly changed hands to Microsoft and what will remain under AOL license.
Tim Armstrong, AOL's Chairman and CEO comments on the particulars of the deal:
"The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio,"
"We continue to hold a valuable patent portfolio as highlighted by the license we entered into with Microsoft. 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."
Brad Smith, General Counsel and Executive Vice President, Legal and Corporate Affairs at Microsoft also comments:
"This is a valuable portfolio that we have been following for years and analyzing in detail for several months,"
"AOL ran a competitive auction and by participating, Microsoft was able to achieve our two primary goals: obtaining a durable license to the full AOL portfolio and ownership of certain patents that complement our existing portfolio."
The former internet pioneer hasn't gained any significant momentum in the market in over five years, but some speculate that new ventures surrounding their recently launched advertising platform could put AOL back in the game.
We'll have to wait and see about that. Shares in AOL are on the rise in the market as of today.