Local.com's (LOCM) Stock Falls: A Victory Of Reason Over Hope

Shares in Local.com (LOCM) are finally headed down after several days of furious rallying. The stock went from under $4 on June 28 to over $13 yesterday. It is off 11% today.

Local came out with two pieces of news. The company received approval for two patents. The first was for "the process of indexing and retrieving web-related information by geographical location", to use the company’s language. The second covers "the method of responding to enhanced directory assistance inquiries using various protocols including voice-enabled and SMS systems. The patent also covers an associated referral advertising model, which is designed to monetize those local searches."

The company was good enough to mention in each release that companies "using our intellectual property to enter into licensing agreements with Local.com."  Seems like a bit of a threat.

Of course, as companies involved in IP patent suits have found, counting chickens before they are hatched often doesn’t work. The recent legal battle between Limelight (LLNW) and Akamai (AKAM) should school Wall St. on that matter.

The other piece of news was that Hearst Communications has bought 22.4% of the company. Why that would matter to anyone is a puzzle.

Local.com is on its way back to where it should trade.

Douglas A. McIntyre