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Tessera Technologies Inc. Message Board

  • white2ronin white2ronin Sep 9, 2011 3:26 AM Flag

    Its Deliberate (2)

    The earnings guidance is weak, but again what I find interesting is management provide just the facts. They have no interest in explaining the poor performance or to give explanations for how they will improve performance.

    It tells me again they are deliverately "kitchen sinking" all of the issues, and further they have little interest in running the company for the benefit of shareholders. They could say for example:

    1) We have a strong balance sheet (over $10 a share of cash no debt)
    2) We have an excellent patent portfolio (patents are in demand - witness Kodak, Nortel, Mosaid)
    3) We are developing future patents (in thermal for example)

    Of course in my view the reason for this is to supress the share price and wear down shareholders for a "take-under" bid. A bid would be at 20-40% premium to the 90 day mva share price. Why raise the bar on management option packages that come with a "friendly buyout"? Given the M&A environment, a bid may well come - it is almost self financing at 1-2x cashflow (EBITDA). If a bid comes, and management stay then we will have our answer.

    With a bit of luck perhaps a hostile bid will come, and with it better management.

    All just my view, and happy to hear thoughts from the board.

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    • The color you're talking about is out of place in a mid-period earnings warning.

      I HAVE been thinking about what you're saying, and there IS a hidden asset that crooked management could be trying to divert to themselves. Various legal awards are due over the next 18 months or so. My personal estimate of the amount at stake amounts to $30 a share. With Tessera's spectacularly good legal record, they figure to collect at least half of what's at stake (and of course, my estimate could be high).

      The problem with assuming malicious management is that it's pretty unlikely that they could get away with it. The money would be collected too soon after a possible take-under to allow much, or really any, muddying of the waters. I believe that the bonds resulting from the Wireless matter would be forfeited immediately after the [likely] deniial of certiorari by SCOTUS (within the year) and the second Amkor arbitration, already well underway, is due to conclude in the first half of 2013.

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