AOL today announced a major patent sale in which the company is selling 800 of its patents to Microsoft and at the end of the deal AOL would be paid $1.056 billion in cash to be exact. This move from AOL is to relieve the pressure on executives of the company from shareholders grumbling over the patents which were highly valuable but poorly monetized. This deal could fill the AOL’s pocket with enough money to further improve the company as “this is another step forward for the comeback of AOL and allows us to remain laser-focused on our strategy and future growth.”, says Tim Armstrong, CEO of AOL.
This patent sale made a big impact on the share value of AOL, which jumped to $24.77 up from $18.31, which is a 35% raise after the deal was announced and at the same time the Microsoft share value dropped 22 cents to $31.30. Besides those 800 patent sale, AOL still has 300 patents around advertising, search, social networking, mapping, multimedia, security and content generation on its hold. Further, AOL managed to have license over the 800 patents they sold to Microsoft which they could use without any lawsuit trouble in future.
Aside from 800 patents, AOL also announced that the deal encloses the sale of the stock of its subsidiary to Microsoft at a loss to enjoy the tax reduction. Although the name of subsidiary was not disclosed on any announcement made by AOL, Peter Kafka of All Things Digital said that “a person familiar with the transaction has clued me in: It’s Netscape”.