I've been following TSRA for some time now and I'm interested in any rational thoughts on the price action over the last few days. We've now had 5 consecutive down days since the bump from the preannouncement and explaining it away as "it's just following the market" doesn't do the decline justice for a couple of reasons. First, after positive news it wouldn't be unreasonable for a stock to actually buck the market trend for some short period of time(at least for more than a day!). Secondly, it has actually fallen significantly more than the market in the last five days to the point where we're staring at the lows prior to the increased guidance.
I basically agree with what has been said so far. Unfortunately that sets us up for a pretty dire scenario should we get anything other than blatantly positive news in the wireless case. Should that ruling be negative I believe we'll see a nasty drop (12-14 pps) and even if it's positive it seems like the upside is limited given the current climate. Agree or disagree?
This decline is perfectly justified unfortunately. This market isnt trading on fundamentals. The entire NASDAQ has been under pressure. The chip sector has been taken out to the woodshed. Look at INTC, TXN, QCOM, etc. Then consider a) good news doesn't last, b) traders are selling into rallies, c) machines are trading stocks based on technical levels in the indexes being taken out. The market is adjusting PE's downward which is exactly what happened in 2008. Value is being redefined. After TSRA raised guidance, the stock popped, traders sold into it. There were higher highs for 3 straight days and thats about the best you can get right now.
The most likely explanation of today, at least, is that Rambus is being required to re-argue (with a 5 month delay) a patent infringement case many people thought that they had won. This may even be a case that at one time was being considered for joining with a Tessera case against the same defendants.
The issues in the two cases are not analogous (as I understand it, the Rambus case hinges on what the key patent protects; the Tessera case hinges on what the products in question do). The companies are less similar than a one sentence description suggests (e.g. much of Tessera's income and little or none of Rambus's derives from licensing of trade secrets rather than patents). But both companies are IP licensors and the unexpected delay (with attendant risk of unfavorable outcome) re-emphasizes the uncertainties of that kind of business.
I'm fairly sure that part of the weak reaction to the preannouncement was due to analysts reasoning "Better than expected sales means that the volume discounts will kick in even earlier this year."
The circuit court decision in the Wireless matter could come down pretty much any day now. Unfortunately, I'm told that appeals to The Supreme Court are fairly common (cases in litigation are a pure negative to analysts; they project legal expenses but not awards).
bad is likely to reply with some disparagement of 'funnymentals.' Just recall that he lost a bet and by his own terms he can't say anything about technicals.