Tessera Technologies, Inc. (TSRA)
Q4 2012 Earnings Call
February 07, 2013, 05:00 pm ET
Moriah Shilton - Senior Director, Investor Relations
Robert Young - President & CEO
Rick Neely - EVP & CFO
Krish Sankar - Bank of America
Previous Statements by TSRA
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Thank you. Moriah Shilton, you may begin your conference call.
Thank you, Mike, and good afternoon, everyone. Thank you for joining us for the call today. This call is also being broadcast live over the Internet. I will now read a short Safe Harbor statement.
During the course of this conference call, management will make a number of forward-looking statements, which are statements regarding future events, including the future financial performance of the company. These forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve risks and uncertainties that could cause actual results to differ significantly from those projected. You are cautioned not to place undue reliance on the forward-looking statements, which speaks only as of the date of this call.
More information about factors that may cause results to differ from the projections made in these forward-looking statements can be found in Tessera’s filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2011, and its quarterly report on Form 10-Q for the quarter ended September 30, 2012, especially in the sections entitled Risk Factors.
The company disclaims any obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that occur after this call.
On the call today from management are Robert Young, President and Chief Executive Officer; Rick Neely, Chief Financial Officer; Barney Cassidy, President of Tessera Intellectual Property Corp. and General Counsel and John Thode, President of Digital Optics Corporation.
During the call today, management may discuss certain non-GAAP financial measures for comparison purposes only. The non-GAAP amounts of cost of revenues, research and development, selling, general and administrative expenses, net income and earnings or loss per share do not include the following: stock-based compensation expense, acquired intangibles amortization charges, charges for acquired in-process R&D, impairment charges on long-lived assets and goodwill and related tax effects. After management’s brief opening remarks, we will open the call to your questions.
And I will now turn the call over to Bob.
Thank you for joining us on the call today. I would like to take few minutes to discuss our corporate and business unit highlights before opening the call for your questions.
One of the main highlights of course is the announcement we made today, we’ve appointed John Thode, as President of DigitalOptics Corporation. We believe John’s consumer mobile product industry experience and expertise along with a strong telecommunication industry relationships positioned him perfectly to lead our DigitalOptics efforts and I look forward to working with him.
Turning to a review of the year and recent events, our fourth quarter 2012 results were in line with our expectations and for the full-year of 2012, we were within our targeted long-term Intellectual Property average annual run rate goal. In 2012, we strengthen our board of directors with the appointment of two new board members distinguished industry veterans, Rick Hill and Tim Stultz and this expanded our board to eight.
We also made significant changes to our management team. In addition to John Thode, we appointed Barney Cassidy last month as President of our Intellectual Property segment. These actions [brought] upon two key changes we made last year. In August of 2012, we hired Rick Neely as our CFO and in December, we hired Jim Chapman as the Senior Vice President of Sales and Marketing for DigitalOptics.
Also in November, we announced that we made a strategic position to focus our DigitalOptics segment on efforts on our core MEMS camera module business and accordingly implemented significant cost cutting measures. We're also announcing today that we're undertaking G&A cost reduction efforts. These efforts are part of our commitment to the long-term growth in stockholder value. Our confidence in our prospects overall is reflected in the initiation of quarterly dividend that we announced in the first quarter of 2012.
Now for a brief discussion of our business segments. In our Intellectual Property segment, the fourth quarter revenue was $43 million and included a $24.7 million in past production payments. In January, we announced SK Hynix Inc. as the first DRAM maker to take a license to our Invensas Corporation portfolio, which expands our revenue base. The successful conclusion of the SK Hynix deal gives us confidence that we're well positioned to maintain our targeted long-term Intellectual Property average annual run rate revenue.
Turning to our DigitalOptics segment, 2012 was a year of investment and progress as we pursue the significant opportunity in the 4.5 million smartphone and camera module market. One of our most recent milestones was a fourth quarter shipment of sample quantities of our MEMS auto-focus camera modules to three smartphone OEMs.
In 2012, we invested significantly in plant, facility and capital expenditures to implement our manufacturing strategy. Capital expenditures in 2013 however will drop significantly as we have already made most of the capital investment that we need. We will add capital to create additional production lines as we see the right process yields, factory performance and customer orders above our current capacity.