Chip technology developer
Tessera Technologies Inc.
) has provided its guidance for the second quarter ending June 30,
Tessera expects revenue in the range of $59.0 million to $60.0
million, up 26% to 29% from the prior quarter. The guidance was
above the analysts' estimate of $58.7 million, according to Thomson
Revenue from the Intellectual Property segment is expected to be
$50.5-$51.0 billion, including one-time payments of approximately
$8.0 million, unit volumes from certain DRAM licensees and volumes
from the renewal of one major DRAM contract. DigitalOptics segment
revenue is expected to be $8.5-$9.0 million, comprising royalties
and license fees of approximately $5.0 million, and products and
services revenue of $3.5 million to $4.0 million.
Tessera remains optimistic about the revenue coming from the
renewal of licensing contracts as it has been scoring legal wins in
recent times, and expects other big companies to renew their
licenses going forward. In the last quarter, Tessera obtained 4 new
licenses, two of which were by important Japanese licenses.
Even in digital optics, Tessera has been seeing some success
with its new MEMS lens subassembly. The segment has transitioned
from an imaging and optics focus to an ODM of camera modules for
the mobile phone market.
However, we find the revenue guidance a little aggressive as the
company has not posted any revenue growth in the past four
quarters. Tessera's first quarter revenue was down both
sequentially and year over year, hurt by the non-renewal of major
licenses. Additionally, the company is entangled in various
lawsuits with big customers, such as
Amkor Technology Inc.
) and Powertech, where positive outcomes are not ensured.
Other guidelines include non-GAAP operating expenses of
$44.0-$45.0 million and GAAP operating expenses $56.0-$57 million,
including stock-based compensation of $5.7 million and amortization
expense of $6.3 million. The litigation expense is expected to be
significantly higher than the $3.5 million reported in the first
However, the company has a strong balance sheet, with $490.4
million in cash and short-term investments and no debt. The
company's financial strength allows it to invest in attractive
growth opportunities through the economic cycle.
Very recently, the company signed an agreement with
Flextronics International Ltd.
) to buy certain assets of its Vista Point Technologies, a tier-one
qualified camera module manufacturing business. The company is
expected to continue to invest in companies that will boost its
long-term earnings power while providing attractive returns to
In March, Tessera announced that it will start paying a
quarterly cash dividend of 10 cents per share, to shareholders of
record on May 24, with the first payment due on June 14. The
initiation of a quarterly dividend indicates that the company has
sufficient capital resources for the near term and is confident
about its long-term growth prospects.
Tessera's various legal entanglements and pricing pressures in
the DRAM market remain overhangs, keeping the Zacks Rank on Tessera
shares at #4, implying a Sell recommendation over the next 1-3
AMKOR TECH INC (AMKR): Free Stock Analysis
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