TSRA - Tessera Technologies

[yadayada]

Got the idea from top rated VIC write up, but i cannot read them so im forced to figure it out myself. It seems they are a R&D company  in the tech space with chips (or the way chips are assembled at the circuit board).

 

They seem to collect licensing income from all the major players like Qualcom, Samsung etc. They have 300 million in net cash or so, and about a 1.1 billion$ market cap.

 

Now it seems they also have technology that lets smart phone and tablet makers integrate better and more economic cameras in smart phones, and they have software technology to prevent red eyes among other things.

 

They explain it better then I do :D

http://files.shareholder.com/downloads/TSRA/3180010335x0x723349/D52B1EF1-E394-40AE-A10C-6CDF785081F0/TSRA_Q4_Call_PPT_FINAL.pdf

 

What makes this interesting is that apparantly some activist fund that succesfully squeezed money out of AOL's patents got involved with TSRA in 2013 and bought slightly below todays levels. At first TSRA tried to manufacture their new camera technology themselves, but now they will either sell their patents or license them under the new management that was put in place by Starboard

http://www.ipnav.com/blog/tessera-investors-appreciate-the-value-of-ip/

 

Letter from starboard to old management:

http://www.reuters.com/article/2013/02/19/starboard-tessera-ltr-idUSnPnNY61902+160+PRN20130219

 

They think there is a lot of value to be had here, and the latest quarter also looks v promising. Apparantly they are now done mostly with the expensive patent lawsuits, and R&D expenses will also come down. So will SG&A. And recurring revenue will go up. So EV of about 850 million$ there is potentially a lot of value to be had here.

 

Thoughts from tech oriented people on their last presentation? It is mostly Chinese to me.

 

Personally Im tempted to throw this on the too hard pile. But there could potentially  be a lot of value here. And at an EV of ~800m$ a big margin of safety. And much smarter and more informed guys like Starboard seem to think there is a lot of value. If you followed them into AOL at a low point of like 13$, you would have made an amazing return of like 200% after the sale of their patents and got a 5$ dividend a year or so later.

 

Also this (from Starboard's letter)

Erich Spangenberg, Founder & CEO of IP Navigation Group, LLC, a leading full-service patent monetization firm, had the following to say after assessing publicly available information on Tessera's patent assets:

"There are more effective strategies we believe Tessera could deploy to realize enhanced intellectual property revenues.  Current management appears focused on something other than maximizing monetization of revenues for its core IP patent portfolios and, as a result, is missing the opportunity to realize hundreds of millions of dollars of additional revenue."

He is basicly saying, they could make well over a hundred million$ a year in net income, given that costs are probably around a 100 million (given that they also stated that costs are too high).

[Chalk bag]

Wrote it up @ $18. Can't get conviction, have no idea how to price the payment streams and this entire thing is a black-box. And let's be honest, who here has a clue on how to value DRAM patents about TSV and SoC? I wasted too much brain power on this thing.

 

http://dislocatedvalue.blogspot.com/2013/11/the-starboard-powered-bull-case-for.html

 

[PatientCheetah]

Based on news flows, it seems that the patent markets are not as hot as it has been. Apple/Google/Samsung are looking past their differences. I think there were also some push back on the legal front toward patent trolls.