It’s always sad for us here when a spinoff is cancelled, but those situations are often worth filing away as there is always the chance that the situation gets revived. The market could be better, certain hurdles cleared, you never know. The latest example is IDT’s (IDT) recent announcement that it is resurrecting its plans to spin off its patent and licensing subsidiary, Innovative Communications Technologies Inc (ICTI) after having scrapped the idea mid last year.
ICTI’s portfolio of patents are mostly related to communications over computer networks including VoIP where IDT was an early player. The company has recently stepped up its patent defense efforts by filing several lawsuits in the beginning of the year. According to ICTI’s current CEO Jeff Ballabon, the company “carefully compared the opportunities and limitations of continuing the effort to monetize ICTI’s patent portfolio within the IDT corporate structure versus alternative strategies…[and] it has become evident that separating ICTI completely from IDT is the optimal way to maximize the value in this portfolio.”
I have yet to see any detailed reason provided by the company as to why that is the case, but hopefully the Form 10 or company presentations will eventually fill in that info. This could be a difficult company to value as intellectual property is a notoriously tricky area. Look at Kodak or Research In Motion (RIMM) to see how challenging patent valuation can be. While the company does receive flows from licensing, it seems like ICTI is going to take a more aggressive approach and be involved in numerous lawsuits defending its property. The results of those lawsuits could have a big impact on the company.
The spin is still in the early stages though and few additional details have been released. For our earlier coverage of this spinoff (back when it was cancelled), check out our posts here and here. We will keep you updated as more information becomes available.
Disclosure: Author holds no position in any stock mentioned.