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Tessera Technologies Inc. Message Board

  • white2ronin white2ronin Aug 30, 2011 4:16 PM Flag

    It's Deliberate!

    The Longs make excellent arguments that cash per share is high ($10+ a share) and that company trades at a multiple of 1.4x Enterprise value to EBITDA being $204 million EV (net of cash of $527m) and latest 12 months EBITDA of $147 million. The share price is quite low, and management may have no inclination to improve the share price. Reason: to do a buyout with a friendly buyer at a low "take-under" price. To achieve this management needs to wear down existing shareholders by keeping the 90 day moving average share price as low as possible. A bid premium in today's market is circa 30% and this would be more expensive at higher historical share prices (ie $20-$50). Some further observations:

    1) The company could easily pay a dividend or do a share buyback and has chosen not to (a dividend of 4% is circa 4x covered)- this action would bump the share price

    2) Management has been uninspiring on latest conference calls

    3) The company is not selling itself as Kodak has recently on the value of its patents

    4) The company recently appointed Anthony Tether to the board

    A.T. is x Darpa and is plugged into the defense companies which could buy this at a take-under price (with some nice options for management)

    5) Mosaid which is in similar business is subject of an unsolicited C$38 bid which values the company at 7.5 EBITDA (or 5x that of TSRA) - how is that possible?

    There are plenty of buyers for this company and hopefully an unsolicted offer will wake up management and shine some sunlight on this situation. The patent portfolio would attract google, apple, rimm or the like. The deal pratically funds itself, but the company has managed to fly low on the radar screen (with the help of management in my view)

    The above all just my opinion and happy to hear thoughts from the board.

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    • I hadn't thought about Google as an acquirer. They probably make the most sense of anyone. They make even more sense as a buyer of the imaging division only.

      The kind of games you're talking about work best for companies with large ->hard to value<- assets. When the treasure inside is visible cash, shareholders have a relatively easy time proving that they've been robbed.

      Until industry sorts out the direction high density and 3-D packaging are going we won't know if Tessera has a real future.

    • good points in general.

      a few thoughts of my own....

      investors in this stock have to understand that the reason this stock is trading so cheap is bc the main sources of revenue at least from a historical perspective are very uncertain going forward. some of their key workhorse patents have expired and no longer generating revenue. as a result, if they arent able to re-sign the 3 major memory producers by middle of next year, the ebitda numbers that you are using in your ratios will drop like a rock.

      in regards to a push for div or buyback, i think that would be a 0 sum game, especially for a company like tsra with an extremely uncertain outlook and earnings power. in my opinion, if tsra were to start issuing a div or a buyback, share price wouldnt budge. whatever shareholders gain from a payout or buyback would be lost in market cap and share price. it works for a solid company with good outlook but not for a coompany like tsra.

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