Court Approves Google's Bid For Nortel's IP

Meshach writes "A court had approved Google's bid to take ownership of Nortel's arsenal of $900 million worth of patents and patent applications. Other bidders will have until June 13 to submit competing offers. Unfortunately, neither shareholders of Nortel nor the company's employees waiting for a pension will see any of that money."

Comments

$900M does not go very far

[RichMan]

$900M is less than what the last 3 CEO's of Nortel walked out the door with in salaries and benefits. We really really need a corporate revolution where executives are not rewarded in ridiculous amounts.

John Roth pocketed $100M in 2000.
http://www.cbc.ca/news/business/story/2001/03/14/nortel010314.html

If CEO's get options they should be at only a slight discount on the current stock price and not execisable for 20 years. Long term value is what is needed. Not short term decisions which strip assets and long term strength in trade for short term magic accounting numbers.

Re:$900M does not go very far

[rmstar]

I think the system is working here. Companies that make smart decisions survive. Companies like Nortel that pay zillions of dollars to people running the company into the ground do not survive.

Is that sarcasm? You surely have not missed that those running the company to the ground and those that decided their pay were the same people? It is the common worker at such a company that suffers the consequences of the bad decisions taken by the good folks with the golden parachutes. The system is not working at all!

Re:$900M does not go very far

[mcmonkey]

If CEO's get options they should be at only a slight discount on the current stock price and not execisable for 20 years. Long term value is what is needed. Not short term decisions which strip assets and long term strength in trade for short term magic accounting numbers.

The very idea of giving stock options to high level executives is antithetical to the purpose of retaining quality executives who will make good decisions for the benefit of the company.

Options given in addition to other forms of compensation are basically bribes, and as such necessarily pointless. The person who will provide an honest day's work for an honest day's pay will not be persuaded to be any more 'honest' as a consequence. The person who insists on extra benefit above salary will always want more.

The cult of the stock option is a cargo cult. The lavish compensation package doesn't create a good CEO any more than building a runway will create planes.

Re:$900M does not go very far

[SETIGuy]

When the compensation committee, hired by a board stacked with cronies, is stacked with cronies? I think you underestimate the power of the dark side. I think you also overestimate the power of the shareholders.

Re:$900M does not go very far

[Obfuscant]

The cult of the stock option is a cargo cult. The lavish compensation package doesn't create a good CEO any more than building a runway will create planes.

Oooh, an aviation analogy instead of automotive. Very nice.

Lavish compensation will not create a good CEO. Very true. It will, however, reward (when that compensation is in options) one that works to keep the stock prices high. Just as you don't create planes by building a runway. If you build a very large and expensive runway, however, you will attract large and expensive airplanes, the owners of which are more likely to spend a lot of money at your airport.

A 1700 foot grass strip is good for Cessna 150-type aircraft. A 10,000 foot paved surface with a precision approach at each end will attract 747s filled with people who will buy trinkets and a company that will buy a lot of gas.

The very idea of giving stock options to high level executives is antithetical to the purpose of retaining quality executives who will make good decisions for the benefit of the company.

Very very wrong. If the company benefits, the value of the company stays high, which means the stock price stays high. That makes stock options worth even more.

Maybe you don't know how stock options work. An option means that you have the ability to buy stock at a fixed price (say, $1/share) even if the stock is currently trading at $1.10/share. If you are a good CEO and make the company worth more, the stock price will go up, but you can still buy shares at $1 each. If you are a bad CEO, the company goes bust, the stock plummets, and your ability to buy stock at $1/share is worthless. (I know -- as an employee I was given options as part of my hiring. The company tanked, the options were worthless.)

Now, you may be thinking of put options, where you are guaranteed a buyer for any stock you have at $1/share no matter how high or low the price goes. This is a wash for the CEO (and thus why it isn't the kind of options used in this context) because he gets the same amount of money for his 1000 shares whether the stock tanks or it stays the same. He only profits from the 1000 shares if the price goes up, but then, he doesn't need the option to sell at a higher price.

Re:$900M does not go very far

[bmo]

This is why that every CEO that deliberately drives a company into the ground should be tied up and shot by the workers. Because he deserves it. Golden parachutes are worthless if you can't spend it. Maybe that will put some incentive into running a company correctly. Because as it is, there is no incentive.

Seriously.

--
BMO

Re:$900M does not go very far

[msauve]

Huh? If you're an exec with 100K options in Company X it's in your interest to make good decisions which in turn drive up the share value.

If, by "good decisions," you mean illegally cooking the books to show greater profits than actually exist. That's exactly what happened at Nortel, and it was driven by executive compensation incentives. Of course, the ultimate result of those "good decisions" was the failure of the company.

Re:$900M does not go very far

[TooMuchToDo]

I'm gonna go long pitchfork futures.

Re:$900M does not go very far

[JAlexoi]

Ah... You're an idealist. Let's see how much money and how worthless executive compensation was for Lehman Brother's CEO? Yep, he netted over half a billion over 14years. Granted, it's OK. Over 14 years he actually earned between 50-100 million, the rest were stocks. So why wasn't that wealth wiped out when he ran the company into a bankruptcy? That is why the system is broken.

Re:Since Google is an advertising company

[mr1911]

If Google did not have a large patent portfolio they would likely be sued out of existence very quickly. Patent portfolios are a necessity.

Re:On Election day, this comes out...

[Mashiki]

Yeah well nortel tanked pretty hard on their own stupidity. Much like how BCE is doing.

Re:Since Google is an advertising company

[Reapman]

If I've learned anything about mobile hardware, it's that it's a mine field of litigation and patents. Often the biggest complaint I hear about Android and Google is that they don't have enough patents to fight off the big guys of the mobile world - likely this is to resolve that situation.

Compared to the alternatives I still would trust them more then the others. I guess I'm from the generation that still remembers Google as the ones that, in a way, saved the Internet from itself. Without a good reliable search engine the Internet is pretty useless - Google fixed that by not allowing better rankings by paying more $$$. They proved you don't have to pull crap like that to make money. With that said Google is a company - no company should be 100% trusted, but so far I haven't been burned by them.

The biggest complaint I've heard is that Google sells my information. Well, let's see.. I use Google.com, and I use an Android phone. So far nobodys broken my legs. I haven't received excessive spam (Well, maybe, but GMail does a good job of blocking them if I have), nobody calls my phone asking to sell me stuff. So far all I've seen are... local ad's when searching. I am ok with that.

Re:Since Google is an advertising company

[DaMattster]

IMHO, this is a good thing for open source. Google has proved its intentions are good with the webm project and google talk.

Re:Since Google is an advertising company

[Riceballsan]

I hate to say it but both analogies are about right. It is 100% impossible to be in the mobile race without asinine patents that should have never been granted in the first place. Every company has them and the only way to counter is to respond with "oh yeah well you are infringing on my blatant obvious patent as well". So far in the patent suits I haven't seen Google actually pick a fight with anyone, only counter-suits after they are attacked. If they cannot counter they will be strangled, and there is no alternative. The only other alternative is to simultaneously abolish the moronic patents across the world, and that falls into the realm of it would be great, but not going to happen. Much like the only solution to nuclear weapons is to simultaneously erase everyone's memory of how to make them. Otherwise the only option is to want the people who aren't going to use them to "start" a fight, to be the ones who have them.

Re:Since Google is an advertising company

[LWATCDR]

Depends. One of the things with these patents is that Microsoft cross licensed them. The rest is just what I have heard so take it with a grain of salt. They did a cross licenses deal in perpetuity. with Nortel. If that is true and it transfers to Google then Microsofts attacks on Android based on patents could come to a screeching halt.
So is that good? Well for a lot of Android users it is and for companies that are using android it is. For Microsoft and it's share holders it is evil. For Google shareholders it is probably a good thing. In cases like this Good and Evil in a large part depend on who is writing your check.

Agreed on the shareholders

[pavon]

For the pensioners, it should be considered criminal fraud to offer a defined benefits pension without having money in the bank to back those promises.