$1bn patent sale sees AOL shares at year-high

AOL Inc shares surged yesterday to their highest level in more than a year after it said it has agreed to sell 800 of its patents and license others to Microsoft Corp. for about $1.06bn (€800m) in cash.

The New York-based website developer and internet access company said it plans to return some of the proceeds to its shareholders. After the sale, AOL should have about $15 per share of cash on hand.

AOL shares jumped $7.78, or 43%, to $26.20 in morning trading, adding about $750m to its market capitalisation. Microsoft shares slipped 37 cents, or 1.1%, to $31.15.

In February, one of AOL’s largest shareholders, an investment firm, said it would nominate candidates for the company’s board because it was not doing enough to make money from its patents. In response, the company said it had already begun to look at ways to unlock patent value.

Patents have become a hot commodity in the hi-tech industry in the last few years. They are useful both for attack — for suing competitors — and for defence — for warding off lawsuits with threats of countersuits. Software patents can have broad applications, and thousands of patents can apply to a complicated product such as a mobile phone. Google is buying phone maker Motorola Mobility Holdings Inc for $12.5bn to get hold of its patents.

After the sale, AOL said it will still hold more than 300 patents and applications covering a variety of core and strategic technologies including advertising, search, content generation, social networking, mapping, multimedia, and security among others.

AOL also got a licence to the patents being sold to Microsoft Corp.