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Tessera Technologies Inc. Message Board

  • jacosa jacosa Nov 4, 2011 12:41 PM Flag

    Nov CC

    Obviously, the headline is continued underperformance. With the punk economy and the rollout of 2 gig DRAM chips (which pay a lower royalty per bit) this was expected. The impairment charge against optical IP made things look worse.

    Second headline is that the CC went about as well as such things go at most companies. Last quarter's shameful performance wasn't repeated.

    But NEWS: what didn't we know before? Well, the big EDOF customer is Nokia; it could have been worse. And Motorola was all but named as being on deck. Silent air cooling is delayed by "supply chain issues." There is at least one design win for the MEMS camera, but even worse supply chain problems.

    Potentially big for stock performance was the news that briefs are in to The Supreme Court on The Wireless Matter. Counsel was more forthcoming than usual in predicting that the case won't be taken up (I don't see that there are any legally 'interesting' issues, so I'll add my teeny voice). It was hinted that Federal courts in general like to announce their easy "won't hear it"-s before year end. What makes that big is that exhaustion of appeals triggers forfeiture of bonds to Tessera. We don't know the amount, but it is likely to be material ($ a billion was talked about when the ITC decision came down, but that is pure fantasy. I put the over/under at $60 MM) The other thing that happens is that a bunch of suits for royalties owed come unstayed. It'll drive the analysts nuts: a bunch of money that their ground rules prevented them anticipating falls into the company's lap, but anticipated legal expenses jump. And even though most of the facts in the again-active cases will already have been decided in Tessera's favor, you can't (especially if you're an analyst) predict the practical legal result. I seriously doubt that these cases will go to verdict because the stakes are too high. Of course, SCOTUS cuould take the appeal. That extends things about a year; you can't be sure, but decisions have gone Tessera's way so far and they are on the legally 'conservative' side of the issues.

    I've been thinking about the MEMS camera, incidentally. A lot of its benefit comes from clever lens design (we tend to forget that Tessera has one of the best optical design shops going). I hope they get a move on, because once competitors know that you CAN get that kind of performance from a movable-element lens, their comparably good design shops may well come up with comparable solutions.

    License renewals in the next year are going to be critical. We got a peek at the degree of confidentiality of those negotiations: terms of the latest renewal prevented Tessera announcing it at the time it happened. From a legal resources standpoint I can't see Tessera playing hardball on licensing right away, so there may be more bad quarters ahead. But on this front, xFD shows some promise. It's covered by the same license; it's an elegant bit of engineering (and it'll be obsolete as soon as REAL 3D chip packaging kicks in); in principle, everyone can be happy if they renew the licenses now and fight over amounts of royalties later.

    The total non-answer to the question about separation of optical from microelectronic should probably be read just that way. They wouldn't have given an informative answer except in the vanishingly-unlikely case that they had absolutely decided to keep everything together.

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    • Later in November TSRA will forecast this quarter EPS - disappoint or exceed.

      Obviously, TSRA stock will react just like last time. Still in a bade economic environment...therefore, I expect lower earnings guidance downward.

      TSRA once was a >20 stock price...ever going to increase shareholders value?

      • 1 Reply to joetong419
      • If you recall (this stuff is ancient), the biggest hit to the price was the reexamination of the now-expired patents, which was spun into sounding like cancellation. Many of us think Qualcomm was behind the spinning, to restrict access to capital markets for legal expenses. The reexamination ought to be finished in the next year, and reexamination hardly ever results in the complete emasculation of patents. The dispute with Qualcomm ought to be resolved on an investor's time scale (18 months or so), and anyway, after the first Amkor arbitration award, there's no real question about being able to afford legal expenses anymore. Not a solution, but an obstacle being removed.

 
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