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Avistar Announces Cost Restructuring in Response to Patent Challenge by Microsoft
SAN MATEO, Calif., March 26 /PRNewswire-FirstCall/ -- Avistar Communications Corporation today announced decisive cost cutting measures. As part of this cost management program, the company will reduce its US and European workforce by approximately 25%, largely by the end of Q1 2008. In addition, Avistar is suspending the formation of its previously-announced China-based development capacity. This cost structure realignment is prompted in large part by Microsoft Corporation's recent challenge to all of Avistar's US patents through the US Patent and Trademark Office (USPTO).
Following extended in-depth licensing discussions, Microsoft moved to challenge all of Avistar's 29 US patents using the USPTO's re-examination process. "This single action against Avistar's complete US patent portfolio represents over 5% of the entire 2007 third-party re-examination challenges at the USPTO," observed Simon Moss, Avistar's CEO. "This leads to only one logical conclusion -- Microsoft must be taking our patent portfolio very seriously in regard to it's relevance to their present or future products. Why else would it take such a dramatic action?"
"Avistar has 80 US and foreign patents in its current portfolio relevant to the burgeoning unified communications market. The patents submitted for re-examination have a 1993 priority date, have already been examined over a large body of prior art, and include patents that have successfully withstood two litigations," added Tony Rodde, Avistar's President; Intellectual Property Division. "Accordingly, we believe that the re-examination process, if undertaken by the USPTO, will validate these patents and make them even stronger."
Avistar remains hopeful of reaching a favorable resolution with Microsoft on licensing Avistar's intellectual property in the near future. In the meantime, however, the prospect of an extensive re-examination process and the potential impact on Avistar's financial outlook have left Avistar with no alternative but to proactively and decisively execute this set of cost reductions in order to protect its intellectual property and its associated product business.
These cost management efforts are structured to effectively align operations to deal with Microsoft's challenges, while still allowing Avistar to continue investing in its C3 video communications and collaboration product line, as well as continuing to license its intellectual property and technology. In expanding its C3 product suite, Avistar has scheduled the introduction of new, market-leading software solutions which implement additional unified communication features, add turnkey room-based videoconferencing solutions targeted at small to medium meeting rooms and executive offices, as well as incorporating significant progress in key community and supply chain innovations.
Avistar is recognized as one of the early pioneers in unified communications. Wainhouse Research expects the market for Unified Communications to expand 104% annually to $16.6B by 2012. The relevance of Avistar's patent portfolio has never been more important to the firm. An analysis conducted last year by Ocean Tomo, LLC, a leading appraisal and services firm with specialized expertise in valuing patents, indicated that, subject to certain qualifications, the potential net present value of monetizing Avistar's intellectual property could represent an income of between $300 and $500 million.
About Avistar Communications Corporation
Avistar creates technology that provides the missing critical element in unified communications: bringing people in organizations face-to-face, through enhanced communications, for true collaboration anytime, anyplace. Its latest product, Avistar C3, draws on over a decade of market experience to deliver a single-click desktop videoconferencing and collaboration experience that moves business communications into a new era. Available as a stand-alone solution, or integrated with existing unified communications software from other vendors, Avistar C3 users gain instant messaging-style ability to initiate video communications across and outside the enterprise. Patented bandwidth management enables thousands of users to access desktop videoconferencing, Voice over IP (VoIP) and streaming media, without requiring substantial new network investment or impairing network performance.
Avistar's desktop videoconferencing and collaboration installations are among the world's largest, including more than 18,000 seats in more than 40 countries. Clients report as much as a 20 percent reduction in travel expense and carbon emissions, increases in productivity, and immeasurably improved relationship building within their organizations, as well as with suppliers and customers. Avistar holds a portfolio of 80 patents for inventions in video and network technology and licenses IP to videoconferencing, rich-media services, public networking and related industries. Current licensees include Sony Corporation, Polycom, Inc., Tandberg ASA, Radvision Ltd. and Emblaze- VCON.
For more information, visit http://www.avistar.com/
Forward Looking Statements
Statements made in this news release that are not purely historical, including but not limited to statements regarding the validation and strengthening of Avistar's patents as a result of the re-examination process, Avistar's prospects for achieving a favorable resolution with Microsoft on licensing Avistar's intellectual property in the near future, the impact of Avistar's cost reductions on its ability to protect its intellectual property and its associated product business, growth in the market for Unified Communications and the net present value of monetizing Avistar's intellectual property portfolio, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act. Such statements are subject to risks and uncertainties that could cause actual results to differ materially, including such factors, among others, as uncertainty associated with the USPTO's review and determination process, the time and expense to Avistar of responding to the re-examination requests and defending its patent portfolio, difficulties associated with enforcing or licensing Avistar's patent portfolio to Microsoft or others during the review and possible re-examination process, the risk that Avistar's existing and pending patents could be revoked by the USPTO, Avistar's lengthy sales cycle, volatility associated with Avistar's sales and licensing activities which make it difficult to match Avistar's expenses with its revenue and risks that the assumptions and qualifications upon which the Ocean Tomo report was based do not materialize. As a result of these and other factors, Avistar expects to experience significant fluctuations in its licensing activities and operating results, and there can be no assurance that Avistar's future results will meet expectations. These and other risk factors are discussed in Avistar's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission from time to time. Avistar disclaims any intent or obligation to update these forward-looking statements.
Avistar Communications Corporation
CONTACT: Ken Lempit of Austin Lawrence Group for Avistar CommunicationsCorporation, +1 203-391-3006, k.lempit@austinlawrence.com
Web site: http://www.avistar.com/
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