RPX IPO Changes Tech Patent Landscape, Patent Trolls to Troll Hunters (RPXC, GOOG, NRTLQ)

RPX Corporation (NASDAQ: RPXC) may be a game changer when it comes to the world of patents and patent trolls.  Its IPO debut on Wednesday was greeted with a strong reception as shares closed over 25% above its initial public offering price. We expected a positive reception, but the reception on top of the pricing was even more than we expected.

The patent risk solutions provider sold 8,430,435 shares of common stock at $19.00 per share, and shares closed up 25.7% at $23.88 on more than 6.8 million shares on the first day.  This was above the 7.3 million shares expected and was also above the $16 to $18 per share price range.  The company’s market cap is now easily worth more than $1 billion.

RPX Corporation describes itself as a patent risk solutions provider that offers defensive buying, acquisition syndication, patent intelligence and advisory services. RPX aims to help mitigate and manage patent risk for its growing client network, for a fee of course.

Goldman Sachs and Barclays Capital were the joint book-running managers for the offering, while co-managers were Allen & Company, Baird, and Cowen & Company have.  It is safe to assume that these underwriters took advantage of the overallotment option, making the real share count in the float about 9.7 million shares rather than 8.43 million shares.

What is interesting is that there are already reports that RPX is considering a rival bid for the remaining patent portfolio of Nortel Networks Corp. (NRTLQ) to trump Google Inc. (NASDAQ: GOOG) in that bid.  Where the questions arise is that Google’s bid is said to be $900 million. For RPX to bid on the Nortel patent portfolio, it is likely to need significant partners.

RPX generated some $95 million in 2010 sales, a gain of nearly 200% from the prior year.  Net income in 2010 was up six-fold to about $14 million.

JON C. OGG