Following a year of financial toil and a change in management, Openwave Systems Inc. has decided to quit the messaging and mediation products markets and focus all its efforts on its patent portfolio.
The company announced Thursday that it is has hired Jefferies & Co. Inc. to find buyers for its product lines and will focus on driving revenues from its intellectual property in an effort to become profitable again.
The company notes on its website that it "established many of the foundational patents that allow mobile devices to connect to the Internet," and that it has "approximately 200 patents covering many innovations spanning smart devices, cloud technologies and unified messaging."
The move comes after a tough 2011 for the mobile Service Provider Information Technology (SPIT) specialist, during which the company reported mounting losses, cut staff and appointed a new CEO. (See More Turmoil at Openwave, Openwave Cuts Staff as Losses Mount and Openwave Names New CEO.)
Shortly after Mike Mulica took over as CEO in October the company hired two experienced intellectual property specialists to head up its IP patent portfolio business. (See Openwave Hires Patent Experts.)
Investors appear to like the move, as Openwave's share price is up nearly 7 percent to $1.89 in pre-market trading Thursday morning.
Why this matters
Openwave was caught in a downward spiral. It had been trying to reinvent itself as an all-IP messaging and mediation system company for the mobile data market and had been positioning itself as a company that could help mobile operators with their data and video traffic optimization needs. But as 2011 progressed, rival Bytemobile Inc. gained momentum in that market while Openwave struggled. (See Waking Up to the Power of SPIT and Bytemobile Ekes Out More Capacity .)
The more focused strategy might save it from further years of product-related operating losses, but whether it can find a home for its product lines is another matter. The company says it will make announcements "as, and when, a specific transaction or transactions occur."
More immediately, Openwave's 440 or so staff and around 100 service provider customers will want to know what the company's changes mean for them.
Its strategy to capitalize on its patents might just work, though. The specialists it hired have a track record of generating hundreds of millions of dollars in IPR-related revenues at Good Technology Inc. and Openwave has already struck a license agreement with Microsoft Corp. for its patent portfolio, giving it an impressive anchor customer.
It has also initiated action against Apple Inc. and Research In Motion Ltd. (RIM) regarding patent infringement. (See Openwave Sues Apple & RIM.)
Openwave isn't the only company looking to generate greater returns from its patent portfolio.
â€” Ray Le Maistre, International Managing Editor, Light Reading