Crossroads Systems (CRDS): A Data Warehousing Company with some very Important Patents Affecting Cisco, Oracle and Quantum

Stephen L Kanaval  |

Crossroads Systems Inc. (CRDS) provides storage routers for storage area networks to more effectively and efficiently store, manage and ensure the integrity and availability of data. The company’s Strongbox Storage Solution is a warehousing option that encrypts data. This hybrid option allows companies to search for stored archives but not have them accessible to others. The company stores the data on tape and in turn cuts costs.

The company’s former Chairman of the Board is activist and investor Jeffrey Eberwein. Eberwein is a very interesting figure who previously worked at Schroders, Citibank and Soros. He has lots of connections on Wall Street and has an estimated 10% of CRDS. He continued to increase interest in the company late last year. One of the reasons might be CRDS’ patents.

Crossroads owns a series of patents on networking protocols and contends companies like Oracle, Cisco and Quantum have violated said patents. The damage award could exceed $200 million, according Eberwein himself. The company settled last year with Huawei, but should be hearing from those mentioned above soon. Richard K. Coleman, Jr., President and CEO at Crossroads Systems, said, "We are continuing to implement our plans to increase shareholder value by leveraging our patent assets. We are working diligently and patiently with interested potential buyers of our non-'972 patents and remain hopeful for a prompt and positive outcome on the pending appeals of our '972 patents."

Last quarter, intellectual property licensing revenue was $197,000 and accounted for 76% of total revenue.

In a previous earnings call, the company highlighted a few key Strongbox orders from Major League Baseball and a SPHiNX tape system order from Mercedes-Benz. The product division, although not the main revenue driver, still has serious potential, especially as cybersecurity threats seemingly increase year after year. CRDS needs to be watched as its litigation concludes and to see how it can continue to license its networking IP.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

Market Movers

Sponsored Financial Content