) reported fourth-quarter 2013 earnings of 8 cents per share, in
line with the Zacks Consensus Estimate.
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Tessera reported revenues of $56.4 million, up 51.2% sequentially
and 18.5% year over year.
Intellectual property total revenue was $49.1 million, up 52.0%
sequentially and 14.2% on a year over year basis. The
year-over-year increase was primarily due to increased royalty
revenues from SK Hynix, Inc. and greater episodic revenues in the
DigitalOptics total revenue from continuing operations for the
fourth quarter of 2013 was $7.2 million compared with $4.9
million in the prior quarter and $4.6 million in the year-ago
quarter. The year-over-year increase was due to a one-time
license fee related to a legacy DOC license agreement.
Owing to the high percentage of licensing revenues, Tessera
usually generates very strong gross margins. Accordingly, in the
last quarter, its pro forma gross margin was 97.05%, 407 bps
higher than 92.98% reported in the year-ago quarter.
Its pro forma operating loss was $44.2 million, or 78.3% of
revenue, compared with a loss of $18.6 million or 39.2% of
revenue in the year-ago quarter.
Tessera's pro forma net income was $4.3 million compared to net
loss of $17.7 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 $47.9 million compared with net loss
of $23.6 million in the year-ago quarter.
Tessera exited the fourth quarter with current assets worth
$393.3 million, down $16.8 million during the quarter. Cash, cash
equivalents and short-term investments totaled $359.6 million,
down from $376.8 in the prior quarter. Tessera has no debt.
For the first quarter of 2014, Tessera expects revenues in the
range of $33 million-$36 million. The revenue guidance happens to
be much below the midpoint of the revenue guidance of the prior
quarter. GAAP operating expenses are expected to be between $51-
$53 million. Management expects approximately $12.0 million of
restructuring charges and other related exit costs, amortization
of intangibles of approximately $4.7 million and stock based
compensation expense of approximately $4.0 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 toward 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
), Foxconn and
Tessera shares currently carry a Zacks Rank #5 (Strong Sell).
Microchip Technology Inc.
) is a better-ranked semiconductor stock with a Zacks Rank #2