Shares of InterDigital Inc plunged 23 percent on Monday after Google's $12.5 billion Mobility Holdings buy sparked worries that the search giant may no longer be interested in the company's wireless patents.
Companies like InterDigital have come to the fore after Apple, Microsoft, RIM and three other companies colluded recently to thwart Google's mobile ambitions, outbidding it in a multi-billion dollar auction for Nortel's wireless patents.
In July, InterDigital said it was looking at a possible sale of the company and the Wall Street Journal had later reported that Google might be in the race for its patents.
Google may have already lost its bid for the IDCC patents and is announcing a Plan B before anything else happens to IDCC; or may be Google prefers the Motorola patents over the IDCC patents, M Partners analyst Ron Shuttleworth said.
Interdigital makes most of its money from licensing its patented technology and from damages it wins in patent lawsuits.
Companies like InterDigital, with strong patent holdings, can force rivals to pay fees for using their technology or to form cross-licensing agreements.
Last month InterDigital filed a complaint against Nokia Corp, Huawei Technologies Co Ltd and ZTE Corp, accusing the cellphone makers of infringing seven patents.
The company holds and licenses around 8,800 patents that range from basic wireless telecommunications system designs and processes to increase network coverage to ways of extending battery life and making more efficient use of bandwidth.
Analysts, however, said the possibility of Google still being interested in InterDigital cannot be ruled out.
One can never have enough patents and the reasons they would be interested in Interdigital are still mostly intact, BGC Partners analyst Colin Gillis said.
Some of InterDigital's patents are essential for international telephony and will not overlap with those that the Motorola buy will bring home to Google, analysts said.
Some other IDCC licensees such as Samsung Electronics, LG Electronics and HTC Corp, which are battling Apple's rising popularity, might buy the patents, said M Partners' Shuttleworth.
He expects InterDigital, which has a market value of $3.44 billion, to fetch a $5 billion price.
Shares of the Pennsylvania-based company were down $16.47 at $59.25 in heavy midday trading, making the stock the top percentage loser on Nasdaq.
Before Monday's losses, the stock had climbed 83 percent since July 19, when it said it would sell itself.
(Reporting by Sayantani Ghosh in Bangalore and additional reporting by Phil Wahba in New York; Editing by Saumyadeb Chakrabarty)