) reported third-quarter 2013 net loss of 91 cents per share,
significantly wider than the Zacks Consensus Estimate of a loss
of 18 cents.
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Tessera reported revenues of $37.3 million, down 20.0%
sequentially and 38.3% year over year.
Intellectual property total revenue was $32.3 million, down $10.5
million sequentially and $25.5 million on a year over year basis.
The sequential decline was mainly due to lower episodic revenues
while the year-over-year decline was attributable to the absence
of royalty revenues in the quarter from
) and PTI.
DigitalOptics total revenue from continuing operations for the
third quarter of 2013 was $4.9 million compared with $3.7 million
in the prior quarter. The sequential increase was primarily due
to higher revenues from image enhancement technologies including
a one- time fee recognized in the quarter.
In comparison to the year-ago quarter, third quarter 2013 DOC
revenues from continuing operations were up $2.4 million, with
the increase being driven by higher revenues from image
DigitalOptics revenues from discontinued operations were $1.2
million in the third quarter of 2013 - related to the products
and services sold from the Charlotte facility.
Because of the high percentage of licensing revenues, Tessera
usually generates very strong gross margins. Accordingly, in the
last quarter, its pro forma gross margin was 95.5%, 157 bps
higher than the 93.9% reported in the year-ago quarter.
Its pro forma operating loss was $9.4 million, or 25.3% of
revenue compared to a profit of $9.9 million 16.5% of revenue in
the year-ago quarter. The decline was because of significantly
Tessera's pro forma net loss was $49.5 million compared to net
income of $11.5 million in the year ago quarter. Our pro forma
calculations are adjusted for restructuring, amortization and
acquisition-related charges on a tax-adjusted basis. Our
calculations may not match management presentation, because of
the addition/deletion of some items that were not considered by
Net loss on a GAAP basis was $59.0 million compared to net loss
of $24.0 million in the last quarter and profit of $4.2 million
in the year ago quarter.
Tessera exited the third quarter with current assets worth $410.2
million, down $7.8 million during the quarter. Cash, cash
equivalents and short-term investments totaled $376.8 million,
down from $380.5 in the prior quarter. Tessera has no debt.
Further, management declared a cash dividend of 10 cents per
share for the third quarter, payable on Dec 12, 2013 to
stockholders of record at the close of business on Nov 21, 2013.
For the fourth quarter of 2013, Tessera expects revenues in the
range of $56 million-$60 million. Intellectual Property revenues
are expected in the range $48-$50 million whereas Digital Optics
revenues are expected to be in the range $8-$10 million. GAAP
operating expense is expected to be between $59- $63 million.
Tessera remains a company with good intellectual property, which
it has protected with great difficulty. However, management is
keen on shifting to a lower-margin but safer product-oriented
model involving camera modules for mobile devices.
We believe the company is on the right track as this could reduce
if not eliminate the significant litigation expenses it has been
incurring. The fact that the target market is fast-growing is an
Tessera is steadily progressing towards achieving its milestone
of conducting an in-depth analysis of its DOC intellectual
property portfolio. Tessera's DOC portfolio leads the
semiconductor manufacturing technology category, ahead of
companies such as Samsung, SanDisk, Foxconn and
). We are encouraged by the fact that Tessera has secured a
high volume purchase order for MEMS/cam modules from OPPO, a
growing Chinese smartphone maker.
Tessera shares currently carry a Zacks Rank #3 (Hold). Another
semiconductor stock worth considering is
Microchip Technology Inc.
), which has a Zacks Rank #2 (Buy).