Dealtalk: Google bid "pi" for patents of Nortel and lost - Reuters

People walk past a logo next to the main entrance of the building in Zurich on March 9, 2011, Google.

Credit: Reuters/Arnd WiegmannBy Nadia Damouni

NEW YORK | Fri July 1, 2011 10: 30 pm EDT

NEW YORK (Reuters) - at the auction for patents this week, Google bid Nortel Networks Wireless were mystery, such as $1,902,160,540 and $2,614,972,128.

Math whizzes can recognize these as constant numbers of Brown and Meissel-Mertens constant, but it surprised many people involved in the auction, according to three people with direct knowledge of the situation on Friday.

One of the sources "Google was auction with numbers are not numbers," said.

"It became clear that they were to compete with the distance between the Earth and the Sun." One was the sum of a famous mathematical constant, and then when it took in $ 3 billion, they bid ft, "the source said, adding the bid was 3.14159 billion."

"They were very confident or they were bored."

It was not clear what strategy using Google, if she wanted to confuse the rival bidders, intimidate or simply express the irreverence which is an integral part of his business persona. Whatever his reasons, Google schemes did not work.

A group of six companies - Apple, Microsoft, RIM, EMC and Ericsson and Sony - won the auction of 6 000 patents and Nortel patent applications with an offer of $ 4.5 billion.

The final figure was three times the amount expected by some analysts - a sign of the lengths of Google rivals, who was willing to go to get their hands on the Treasury of wireless technology and frustrate the central Internet mobile ambitions.

Google expected to emerge victorious after he defined a facade of $ 900 million bid in April. But the auction which began Monday and saw 20 lashes bid four days long finally reached a price that become too much even for Google, the sources said.

The Internet company could have $ 36.7 billion in cash to 31 March, but it was only prepared to go up to 4 billion dollars for these patents, someone said.

FIVE BIDDERS

Five parties, including two consortia, started at the outset to tender for the patent of the Canadian telecommunications company bankrupt - Apple, Intel, Google, a consortium of Ericsson, RIM, Microsoft, Sony and EMC, and a group led by a provider of solutions patent risk RPX, said the sources.

Intel began the auction to 9 p.m. Monday with an offer of $ 1.5 billion, said a source.

The consortium led by RPX, which included the firm Huawei Chinese, abandoned after the first round of the auction held at the offices of the law firm of Cleary Gottlieb Steen & Hamilton LLP. The consortium remained on the sidelines for partner with someone else, but never, said the source.

"It became clear to us very quickly that it was something that a huge pile of large companies with budgets had decided was strategic for them," said RPX Director General John Amster. "Clearly at a price at this level, it should be strategic, and they can afford."

The auction has tested the limits of even the giants, and it took manoeuvring behind the scenes and a series of alignments for a winner to emerge.

FAST AND FURIOUS

Tuesday evening, the Ericsson consortium ceased to tender and started looking for a partner, it is Apple, said the source.

"When people abandon, you try partner of the people", said another source. "It is quite common in the auctions because you try to bring together people who have reached their individual limits and they are always in the assets."

On Wednesday, Intel abandoned-a gesture which was followed by heated negotiations over the next 24 hours as the two remaining parties that once tried the chip giant to join their side of the Court. Intel chose Google, said a source.

The field reduced to two - the Apple consortium called "rockstar", and the Google bid vehicle named "Ranger", said the sources.

"Then it was fast and furious allocations of $ 100 million until they had $ 3 billion, at which point Google asked for permission to bid," said a source. "They bid with 4 billion and limited."

Google has refused to comment on this article, but called "disappointing" auction results

Lazard Ltd. informed Nortel in the deal, while Jefferies was advised by his creditors. Akin Gump Strauss Hauer & Feld LLP has been counsel to the creditors of Nortel, while Cleary Gottlieb has advised the company.

(Other reports by Tiffany Wu in New York and Alastair Sharp in Toronto.) (Written by Paritosh Bansal, mounting by Bernard Orr)