Decision has just came out, the hearing will start at February 21, 2009.
Summary: "Notice is hereby given that the U.S. International Trade Commission has determined not to review the presiding administrative law judge’s (“AL””) initial determination (“ID”) (Order No. 53), extending the target date in the above captioned investigation to February21 , 2009, and setting a date for hearing."
Decision dated on June 4, 2008, it has just been made public.
The patent expiration could actually have a negligible impact depending on the circumstances. For example, say the company uses their current royalty-generating technologies in their new technologies, the optics business for example. You take an existing licensee, offer to supplement their license to include optics, add a new licensing period, then when the original patents expire, they are still paying on the license because it is using expired patents to support new patents. Its just replacing one royalty stream with another, but keeps the customer active in the revenue pipeline. Just a thought. The obvious problem is that many licensees won't need a license for camera modules since thats not their core business, but you get the idea. I hope they can leverage their old (existing) technologies into their new business segments somehow and keep their income streams alive. So to answer your questions (excellent questions too) I would hope they can keep some percentage of existing customers as paying licensees, while developing a new customer base on new technologies as well. I think these questions will come up more often with each earnings call.
Thanks, Tech... I appreciate your read..... I know how TSRA's patent portfolio has grown exponentially with its research efforts and that is exceptionally encouraging. As positive is that is, recreating the Holy Grail must be rated as problematical at best.... That's why I asked about the consequence of patent expiration. Can newer patents built upon the expertise developed in inventing the older patents have the effect of extending the revenue stream for TSRA beyond the original patent expiration? Or is TSRA's future dependant upon successfully reinventing itself not as an intellectual properties company but as a leader in optical technology and product manufacture?
I think that if Amkor decision goes Tessera's way then investors' confidence in Tessera will increase and the concern over patents will decrease a little. Still, I agree, patent expiration is a long-term concern.
Saw this on Morningstar today . . .
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From the Analyst Report: "The unstoppable trend toward miniaturization that Tessera's (NasdaqGS:TSRA - News) chip-scale packaging technology enables and its success in using the courts to extract revenue from chipmakers much larger than itself are two reasons we think Tessera Technologies is a good high-tech investment for the more adventurous."
I agree. TSRA has taken the hit overall because the patents have been questioned and TSRA seems to be struggling more than before to fight back. Regaining that confidence long term is going to be difficult. I don't know the expiration dates for all of the key patents, but the one we've talked about expiring in 2010 is concerning. 2010 isn't far away.
The AMKR decision will give the stock a boost. I see Investorpatent's arguement, he's just too early to use it. If I were him, I'd cover now. Maybe even buy a long position. Post-AMKR, I'd cash in and think about the right time to short. I'm in at an average of about $20. I doubt that I'll stick around waiting for $32.
TSRA needs to get the new technologies on-line to replace expiring patents. That is when long term confidence can come back.
See, I'm with you. While I recognize that the possibility exists of the AMKR decision going against TSRA, I believe the chances are slim, and I feel the upside is MUCH MUCH greater than the downside. The final arguments were completed a couple of weeks ago, and the word is that a decision will come in July or August (I was certainly hoping for something sooner). My understanding is the arb panel is made up of one judge selected by each of the two companies and a third judge selected by neither.
The confusing part of all this is that if the AMKR decision were to go against TSRA, their earnings remain unchanged, so why such a drop in the stock price? Obviously because their core patents are coming under question. investorpatent insists that the arb panel is looking at the PTO patent claim rejections, but those are non-final, patents remain valid, and I don't see how that could ever be factored into the decision, esp with the 5-8 year timeline to invalidate a patent.
The problem with investorpatent is that I respected and countered his opinions, and when the questions got tough, he put me on ignore. I feel badly that it ended so childishly, since I like a good contrarian opinion as well. So he must believe that AMKR will win, but is unable to justify it. He seems to be trading on emotion rather than common sense. All the non-final decisions in the world wont (or shouldn't) impact the arb decision.
The NASDAQ is getting slaughtered today (RIMM, AAPL, INTC, MSFT), this week has been awful, my portfolio has taken a nasty beating, and I'm hoping for a nice little bounce back next week. Would be nice to see some buying action, but Lord knows when that will happen again.
Couldn't be said better except I think the lawyers and witnesses participating in the process could have a good guess about the outcome, of course it's never sure.
I think 21 is a realistic target if it goes to TSRA's favor (just for the record I would even make a small profit there since my cost is 22).
I don't think it's a 50-50 chance, that's why I'm shorting. I just can't imagine a scenario of a full victory for TSRA based on the information we have.
Just for the record: I covered 1/3 of my short position today because 16 was my target. I will keep the rest till minimum 13.
I agree, Tessera isn't immune from the direction of the general market (particularly the Nasdaq).
Investorpatent says that the Amkor proceedings are over and speculates why the stock hasn't risen higher since. If the proceedings are over it doesn't entail that a decision has been made, right? And isn't the decision by something like three judges, who should be able to keep things quiet during the decision process?
If Amkor goes against Tessera sounds like folks are projecting a drop near $12. That's 4-bucks and change from here and seems reasonable to me. If Amkor goes Tessera's way, and it's a reasonable judgement, 4-bucks and change on the upside would be around $21 a share. I think most of us (even the shorts) would project it'll go a bit higher than $21 a share on a positive Amkor outcome for Tessera. So with a 50/50 probability of a positive Tessera outcome you have to be long the stock. If you think there's a 2 out of 3 chance of Tessera winning (as I do) then you really have to be long the stock. For Investorpatent to justify his short position he must think the odds are much less than 50% of a decision in Tessera's favor?
I thought I have been always clear on that, but let me repeat myself:
TSRA will be awarded something between 5-50M what would be only fraction of the royalty that Amkor owes to TSRA (estimation are between 115-200M). Very few of the patent claims remained in power therefore Amkor has to pay.
The share price will sink because it is an open invitation to other licensees to start an arbitration instead of paying. Imagin how much money Intel could save this way.
I agree. Any bad news on the AMKR front punishes TSRA in a big way, at least in the short term. The next earnings release will be interesting, and I'm quite anxious to hear what they have to say about second half earnings, which they need to release with next earnings announcement.
Your position may be improving by 1-3% per day, but you're not "making" anything unless you're covering, right?
The price has nothing to do with what you're saying. The Dow is down over 10% in just over a month. There is no buying conviction at all in this market. TSRA volume is anemic. $15 is possible the same way the Dow at 10,000 is possible. Has no correlation to longs or short interest, and by your own admission you are discounting the general market. So lets be clear about the facts.
If your point is that trading at $16.60 on 100K shares volume is some great indicator of things to come, well, you better come with more than that.