Apple 10Q Shows $2.6 Billion for Nortel Patents; InterDigital, Eastman Kodak Deals Possible

Apple Inc. (NASDAQ: AAPL) issued its quarterly 10Q which stated that the company's contribution to the recently announced Nortel patent win will be $2.6 billion, once the deal closes.

The full consortium of vendors included Apple, EMC Corp. (NYSE: EMC), Ericsson, Microsoft Corp. (NASDAQ: MSFT), Research In Motion Ltd. (NASDAQ: RIMM), and Sony Corp. (NYSE: SNE) who will pay $4.5 billion in total for Nortel’s portfolio of about 6,000 patents and patent applications.

The Nortel Networks' portfolio of patents related to areas such as wireless, Internet search, social networking, data networking, optical, voice, service provider, and the semiconductor sector.

"We continue to believe the patent portfolio could provide Apple with leverage and potential future licensing fees to more than offset its recent settlement with Nokia Corp. (NYSE: NOK) (who also has a significant number of LTE related patents)," said Ben Reitzes, an analyst at Barclays Capital.

The IP also likely creates an impediment for Google Inc. (NASDAQ: GOOG) and Android in general -- who obviously had an interest in landing the patents and has a limited patent portfolio currently, Reitzes said.

In short, Reitzes believes that Apple is accumulating patents both internally through development and through acquisition to extend and defend gains in mobility, which seems like a good thing for shareholders over the long term.

With the Nortel sale, other companies are also examining wireless IP sales including InterDigital Inc. (NASDAQ: IDCC) and Eastman Kodak Co. (NYSE: EK).

Reitzes expects Apple to be involved in many of these discussions. With a cash balance of over $76 billion, the company would be a formidable bidder for any IP it covets.

According to the Wall Street Journal, InterDigital is exploring strategic options and news reports indicate that Google and Apple could have interest.

"According to our Wireless team, led by Jeff Kvaal, InterDigital holds about 18,500 wireless patents with the majority covering legacy technologies. The company has declared 'essential' 450 LTE patents, representing a low double digit share versus Nortel's low single digit share. The process of declaring a patent essential of course remains subjective," said Reitzes.

Eastman Kodak -- who had pending patent suits with Apple and RIM -- also announced last Wednesday that it has hired Lazard as an advisor to explore strategic alternatives related to its digital imaging patent portfolios.

Kodak has more than 1,100 US patents pertaining to capturing, processing, storing, organizing, editing and sharing digital images, including imaging monetization applications. Reitzes believes the Kodak patents could be worth a figure in the hundreds of millions.

Apple stock closed Tuesday's regular trading up 1.23 percent at $403.41 on the NASDAQ Stock Market, while in the after-hours the stock declined 0.23 percent to $402.50. The stock touched a new life-time high of $404.50 on Tuesday.