International Business Machines Corp. (NYSE:IBM)’s Patent Revenues Shrinking


Revenue that International Business Machines Corp. (NYSE:IBM) generates from patent monetization is on a decreasing trend, according to the latest assessment. IBM was awarded 7,355 patents in 2015, marking another year in a 23-year period that the company added the most number of patents to its portfolio. A significant number of IBM’s recently issued patents relate to cloud and artificial intelligence, what the company calls cognitive computing.

International Business Machines Corp. (NYSE:IBM) presently boasts more than 88,000 patents accumulated over the last 23 years. The 7,355 patents that IBM was awarded in 2015 far exceeded the number of patents awarded to its closest rival, Samsung. Last year, Samsung added 5,072 patents to its portfolio, making it the company with the second-most highest patent awards in 2015.

Of the 7,355 patents awarded to IBM in 2015, more than 2,000 of them relate to cognitive computing and cloud.

Patent revenues going south

In the case of IBM, one of the interesting things is that the company’s patent related revenues are declining at a time when it appears to be outshining rivals in adding new patents to its portfolio. In the 2008-2012 period, IBM’s patent portfolio produced between $1.1 and $2 billion of revenue every year. However, the amount declined sharply to just $742 million in 2014 and is on course to fall further to less than $700 million in 2015.

In the last 23 years, it is believed that IBM generated $20 billion from the monetization of its patents.

Last quarter results

Meanwhile, International Business Machines Corp. (NYSE:IBM) impressed in its 4Q2015 despite its patent revenues appearing to be sliding. The company posted EPS of $4.84 on revenue of $22.06 billion in the quarter. Although the numbers declined from a year ago, they comfortably beat the consensus estimate of EPS of $4.81 on revenue of $22.02 billion.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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