In an internal memo sent out this morning, AOL informed employees that it will sell 800 patents for $1 billion to Microsoft. Translation: AOL is severing organs and handing them over to Microsoft for badly needed cash. Microsoft, in turn, walks away with an arsenal of patents it can use to fight critical battles with bigger foes down the road.
In the memo, reported by AOL-owned TechCrunch, CEO Tim Armstrong says the deal is aimed at "unlocking the value of our patent portfolio." According to the memo:
This morning, we announced that we've agreed to sell 800 of our patents and their related applications to Microsoft for $1.056 billion in cash. Most importantly, for the future growth trajectory and innovation for our business, we will continue to hold a significant patent portfolio of over 300 patents and patent applications spanning core and strategic technologies, including advertising, search, content generation/management, social networking, mapping, multimedia/streaming and security among others. AOL also received a perpetual license to the patents being sold to Microsoft, which allows us to continue to innovate and drive strategic growth across all areas of our business.
AOL's perpetual licence actually makes this a pretty good deal for AOL. While AOL can't use the patents to defend lawsuits anymore, it can still use the technology. It's like selling your car and getting to drive it whenever you want. Way to go AOL! The deal will reportedly be finalized by the end of the year. [TechCrunch]