There appears to be some question about the value of intellectual property during economic downturns. Some have suggested that the value of intellectual property and intangible assets (IP&IA) are immune to economic downturns. This is not the case, and this chapter will present simple calculations to show that IP&IA value changes with economic cycles.
Exhibit 14B.1 of this supplement showed that in 2005 nearly 80% of the value of the S&P 500 was attributed to IP&IA. So, if the value of the S&P 500 is hit by economic cycles then the underlying value of its IP&IA is also hit. The value of corporations and their stocks is directly tied to IP&IA. In fact, the value of IP&IA dominates the value of the corporations owing them. Exhibit 14B.1 shows the value of IP&IA for five companies involved in very different industries. Included are:
EXHIBIT 14B.1 INTELLECTUAL PROPERTY AND INTANGIBLE ASSETS VALUES
For each company a comparison of its stock price, invested capital, and the value of its IP&IA and IP&IA as a percentage of invested capital (INCAP) are shown for January 2008 and January 2009. The price of company stock has been taken from a ...