(For more Reuters DEALTALKS, click [DEALTALK/])
* Google bids mystifyingly precise, confuse rivals
* Five bidding groups started the Nortel auction
* Auction saw 20 rounds of bidding over four long days
* Apple's 'Rockstar' versus Google's 'Ranger' in the end
By Nadia Damouni
NEW YORK, July 1 At the auction for Nortel
Networks' wireless patents this week, Google's bids were
mystifying, such as $1,902,160,540 and $2,614,972,128.
Math whizzes might recognize these numbers as Brun's
constant and Meissel-Mertens constant, but it puzzled many of
the people involved in the auction, according to three people
with direct knowledge of the situation on Friday.
"Google was bidding with numbers that were not even
numbers," one of the sources said.
"It became clear that they were bidding with the distance
between the earth and the sun. One was the sum of a famous
mathematical constant, and then when it got to $3 billion, they
bid pi," the source said, adding the bid was $3.14159 billion.
"Either they were supremely confident or they were bored."
It was not clear what strategy Google (GOOG.O) was
employing, whether it wanted to confuse rival bidders,
intimidate them, or simply express the irreverence that is part
and parcel of its corporate persona. Whatever its reasons,
Google's shenanigans did not work.
A group of six companies -- Apple (AAPL.O), Microsoft
(MSFT.O), RIM RIM.TO, EMC EMC.N, Ericsson (ERICb.ST) and
Sony (6758.T) -- won the auction of 6,000 Nortel patents and
patent applications with a $4.5 billion bid. [ID:nNL3E7I10H]
The final figure was three times the amount expected by
some analysts -- a sign of the lengths to which Google's rivals
were willing to go to get their hands on the treasure trove of
wireless technology, and thwart the Internet powerhouse's
Google had been expected to emerge victorious after it set
a $900 million stalking horse bid in April. But the auction
that started on Monday and saw 20 rounds of bids over four long
days ultimately hit a price that became too much even for
Google, the sources said.
The Internet company might have had $36.7 billion in cash
as of March 31, but it was only willing to go up to $4 billion
for these patents, one person said.
Five parties, including two consortiums, initially started
bidding for the bankrupt Canadian telecoms company's patents --
Apple, Intel (INTC.O), Google, a consortium of Ericsson, RIM,
Microsoft, Sony and EMC, and a group led by patent risk
solutions provider RPX, the sources said.
Intel started the bidding around 9 am on Monday with a $1.5
billion bid, one source said.
The RPX-led consortium, which included Chinese firm Huawei
[HWT.UL], dropped out after the first round of the auction held
at the offices of law firm Cleary Gottlieb Steen & Hamilton
LLP. The consortium remained on the sidelines looking to
partner with someone else but never did, the source said.
"It did become clear to us very quickly that this was
something that a bunch of big companies with humongous balance
sheets had decided was strategic for them," RPX Chief Executive
John Amster said. "Clearly at a price at this level it had to
be strategic, and they could afford that."
The auction tested the limits of even the giants, and it
took behind-the-scenes maneuvering and a series of alignments
for a winner to emerge.
FAST AND FURIOUS
On Tuesday night, the Ericsson consortium stopped bidding,
and started looking for a partner, which it found in Apple, the
"When people drop out, you try to partner people," another
source said. "It is pretty common in auctions because you are
trying to get together people who have reached their individual
limits and they still have interest in the assets."
By Wednesday, Intel dropped out as well -- a move that was
followed by heated negotiations over the next 24 hours as the
two remaining parties both tried to court the chip giant to
join their side. Intel chose Google, one source said.
The field narrowed to two -- the Apple consortium called
"Rockstar," and the Google bidding vehicle named "Ranger", the
"Then it was fast and furious $100 million allotments until
they got to $3 billion, at which point Google asked for
permission to bid more," a source said. "They bid through $4
billion and tapped out."
Google declined to comment for this article, but called the
auction results "disappointing."
Lazard Ltd (LAZ.N) advised Nortel in the deal, while
Jefferies JEF.N advised its creditors. Akin Gump Strauss
Hauer & Feld LLP was legal adviser to Nortel's creditors, while
Cleary Gottlieb advised the company.
(Additional reporting by Tiffany Wu in New York and Alastair
Sharp in Toronto; Writing by Paritosh Bansal, editing by