R&D Efficiency of RocketCap IP Stock Index Firms

Posted on July 27th, 2011 by admin in Intellectual Property, Market Indexes, Technology

When we announced RIPSI as the first real-time index of the value of certain intellectual property, we focused on the IP Monetization Efficiency of the firms. Now let’s take a look at their R&D efficiency.

We define R&D efficiency as the ratio of a firm’s sales to their R&D expenses over a twelve month period. The sales and R&D data need to be compared as closely as possible for the same ending date, but this goal is hard to do for firms, such as our RIPSI firms, that publish data at varying end dates. But we used Google Finance again to get the most recent data by adding the results for the most recent 4 quarters, shown in th the chart below. The data tabled here is shown in the chart.

R&D Efficiency of RIPSI Components

Data: R&D Efficiency of RIPSI Firms

 

 

 

 

 

 

 

 

 

 

 

 

What’s fascinating here is how the components cluster into three clumps, according to their position in the IP supply chain (business model classification): Enforcers (Acacia, VirnetX Holdings), Designers (Arm, MIPS, Rambus, Dolby, Tessera, Ceva, Interdigital) and Helpers (Mentor Graphics, Cadence, Synopsis and Autodesk)

The  “Enforcers” of IP value have huge efficiency, but relatively low sales. These do not originate IP as much as they defend it.

The next cluster is comprised of the firms that provide design tools, the Helpers. They have very high relative sales, but R&D Efficiency in line with the Designers who sell IP in the form of embedded designs.

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