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Tessera Technologies Inc. Message Board

  • eyedoc08225 eyedoc08225 Sep 2, 2010 10:43 AM Flag

    Just took a position

    in TSRA. Fundamentally it looks extremely cheap. I realize that they deal in intellectual properties and therefore lawsuits are a risk. How big a factor have they been for TSRA and any other problems that are holding it down. Any insights would be greatly appreciated.

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    • Tsra is a likely target in the tech M&A frenzy. They have a bullet proof balance sheet & highly compelling valuation. Smart phone camera sales are only going higher & addt'l applications represent huge growth. Investors can entertain a buy-out premium each night as they rest their heads on the pillow.

    • Legal matters control the stock price these days. Two major ITC enforcement actions are in Federal court appeals; a total Tessera victory would result in payments comparable to the enterprise value of the company. There is an arbitration going on with perhaps half that much at stake. A patent challenge could open Tessera to serious claims for return of royalties. When the action is hot and heavy, legal expenses can peak at levels comparable to total earnings.

      Historically, Tessera has a strong legal track record.

      The real issue for the company is that it is moving from building its licenses around very fundamental [expiring] patents controlling chip-scale packaging to less fundamental patents covering enhanced-density packaging (a business segment which is being held back by the recession). Both software and construction techniques in the optical segment (which is small but is growing quickly) are difficult to protect, making Tessera return to the sale of "things" incorporating its IP.

      • 1 Reply to jacosa
      • The last several quarters, earnings beat the estimates and TSRA never moved to the upside.

        Going to happen again for quarter-ending 9/30/10? S&P500 had the largest return in 70 years but not for tech stocks, in general.

        Be ready for surprises on the downside (<13) or upside (>20).

        This is a hard one to predict - anyone with insight rather than gut feeling, TSRA higher or lower based on specific news.

        General market due to a pause, and TSRA should do the same.


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