![]() ![]() The company does not have any major growth drivers.Ĥ. The company's new products will replace its existing chip packaging recurring revenues. However, that venture has not worked out for TSRA leading to substantial operating losses in the last few years. Not much visibility on new growth catalysts - The company tried to grow its business by getting into the camera module business. Losses in the last 2 years have decreased the company's cash hoard from above $500 million to less than $400 million now.ģ. The company also made a loss in the most recent quarter which led to a substantial cash outflow. The company showed a loss of $19 million in 2011 which increased to $30 million in 2012. Losses in last few quarters - TSRA has been making losses in the last few quarters as the legal, SG&A and R&D costs have outpaced the revenue. What is notable is the fact that this was the first veto on an ITC ruling by the US President in more than 20 years.Ģ. President Obama recently vetoed a ban on import of iPhone by the ITC. While TSRA is not exactly a troll having developed its own technology and patents, the company could come under pressure as regulators place greater scrutiny on companies earning most of their money through patent litigation. have paid out hundreds of millions of dollars. There has been a number of cases where small startups have been intimidated into shutting their operations, while other big companies such as Apple, BlackBerry (BBRY) etc. Regulatory Risks - Patent trolls are starting to have a big negative effect on innovation in USA as some companies are aggressively going after other companies with an army of lawyers after buying some patents. The company is returning to its tried and tested model of licensing IP to other manufacturers.ġ. Tessera is actively trying to spinoff this segment and has already fired a number of workers in this division besides closing its contract manufacturing facility. The segment is involved in the design and manufacturing of camera modules based on the MEMS technology. The second segment is the Digital Optics segment which has been the source of company's underperformance. The company owns more than 1500 patents in the USA and globally which is the main revenue driver for this segment. The first is the Intellectual Properties segment which licenses the company's chip packaging technology to more than 70 companies worldwide which includes global giants such as Hynix, Samsung ( OTCPK:SSNLF), Micron ( MU), Intel ( INTC) etc. Tessera Technologies has two main segments. I think that Tessera can be avoided given this risk and limited upside. The recent veto of the Apple ( AAPL) iPhone 4 import ban by ITC does not augur well for companies such as Tessera, whose business model depend on patent litigation and royalties. The company also faces big regulatory risks as Washington is trying to overhaul the IP laws, so that IP trolls do not disrupt the innovation in the industry. ![]() Tessera has mostly traded in a narrow range in the last few years, as the company has not shown any major growth drivers in the recent past and its camera venture has not really worked out. The company is heavily cash positive as it gets a steady stream of royalty revenues for its 1500 plus patents and also wins "episodic revenue" (legal settlements against companies it sues). TSRA is on its way to spin off its digital optics segment which has contributed heavily to its operating losses in the past few years. The company has recently started to restructure its operations getting out of the contract manufacturing of camera modules for smartphones. The company gets most of its revenues (80%) by licensing the IP for chip packaging to other semiconductor companies as well as assembly and testing companies. Tessera Technologies (TSRA) is a small technology company that develops semiconductor chip packaging solutions and digital optics. ![]()
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