Tessera Technologies Inc. (TSRA)
Q1 2010 Earnings Call
April 28, 2010 4:30 PM ET
Moriah Shilton - Senior Director, Investor Relations
Hank Nothhaft - Chairman and CEO
Mike Anthofer - Chief Financial Officer
Barney Cassidy - General Counsel
C J Muse - Barclays Capital
Krish Sankar - Banc of America
Simran Brar – Cowen
Kevin Vassily - Pacific Crest Securities
Michael Cohen - MDC Financial
Previous Statements by TSRA
» Tessera Technologies, Inc. Q4 2009 Earnings Call Transcript
» Tessera Technologies, Inc. Q2 2009 Earnings Call Transcript
» Tessera Technologies, Inc. Q1 2009 Earnings Call Transcript
Thank you. Ms. Shilton, you may begin.
Thank you, Trinity, and good afternoon, everyone. Thank you for joining us for the Tessera Technologies first quarter 2010 results conference call. This call is being broadcast live over the internet. A webcast replay will be available at tessera.com for 90 days after the call. In addition a telephone replay of this call will be available for two business days beginning approximately two hours after the completion of this call. To listen to the replay in the U.S., please dial 800-642-1687 and internationally dial 706-645-9291. The access code is 68338769.
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’re cautioned not to place undue reliance on the forward-looking statements, which speak 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, 2009, especially the sections of these filings titled 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 Hank Nothhaft, Tessera’s Chairman and Chief Executive Officer; Mike Anthofer, Chief Financial Officer; and Barney Cassidy, General Counsel.
During this call today, management will discuss certain non-GAAP financial measures for comparison purposes only and they’ll be using non-GAAP numbers in their prepared remarks. The non-GAAP amounts of cost of revenues, research and development, selling, general and administrative expenses, net income and earnings per share do not include the following, stock-based compensations, acquired intangibles’ amortization charges and related tax effects.
Management believes the non-GAAP amounts provide a more meaningful comparison measure of quarter-over-quarter and year-over-year financial performance. Please refer to the company’s first quarter 2010 earnings press release and to the company’s website for a reconciliation of non-GAAP measures to GAAP.
After management’s opening remarks, we will open the call to your questions. So that management is able to respond to as many of you as possible, please restrict yourself to an opening and a follow-on question. Please re-enter the queue if you have additional questions.
And with that, I will turn the call over to Hank.
Thank you, Moriah. Good afternoon. And welcome to Tessera’s quarterly earnings call. On today’s call, we will discuss our first quarter 2010 results and recent developments. We will then open the call for your questions.
Total revenue for the first quarter of 2010 was $64.3 million. $55.8 million was Micro-electronics royalties and license fees, which included a $3 million payment from United Test and Assembly Center Ltd. or UTAC, for past royalties under a litigation settlement.
$8.5 million was from Imaging & Optics, of which $5.4 million was products and services revenue. We benefited from increased first quarter demand in the lithography space, one of the key markets for our micro optics products.
Turning to our Micro-electronics segment, in the first quarter we settled our breach of contract litigation with UTAC. The settlement includes $15 million in payments to us for past royalties that will be spread throughout 2010, as well as an updated license agreement with an initial term that runs through the end of 2016.
In addition, we signed a packaging technology license agreement with Nanium, S.A., formerly the assembly and test operations of Qimonda in Portugal. We anticipate receiving initial revenue from this emerging DRAM assembly and test services company in the fourth quarter of this year.
Looking at our served markets of DRAM and wireless, both the first and second quarters of 2010 are shaping up in line with forecasts for an improving semiconductor market. We expect to benefit from the anticipated greater unit growth.
As a reminder, we recognize royalty revenue one quarter in arrears and our revenue growth will be limited due to the volume based pricing incentives we have with two large DRAM manufacturers. The impact of these volume based pricing incentives is reasonably predictable. All things being equal, they will have a disproportionately positive impact on our second and to some extent third quarters.
We encourage you to evaluate Tessera on an annual basis as our quarterly revenue will vary due to these volume based pricing incentives and the timing of nonrecurring discrete items such as the initial license fees, fees from settlements and fees from our ongoing audit program.