WIN UPDATE; RECENT RENEWALS AND LITIGATION
? EVENTS This week WIN announced the signing of patent license renewal agreements with Aten Technology ("Aten"; 6277.TW, Not Rated) and Motion Computing (Private). WIN also recently won a ruling at the US Court of Appeals in Texas versus Ericsson (ERIC-US, Not Rated).
? IMPLICATIONS Positive. WIN is re-signing companies with multi-year agreements that are expiring and we expect that other companies with expiring agreements will also be signing renewals in the near term. Recent licensing agreements and settlements between other technology companies should bode well for WIN’s litigation versus Apple (AAPL-US, Not Rated) that is scheduled for later this year.
? CATALYSTS Near term: We look for the signing of new licensing deals across the patent portfolio (wireless, digital TV, semis, medical, automotive); divesting of non-core patents to generate revenue. Long term: WIN has the ability to acquire new patent portfolios and sign new partnerships with large multinationals (MNCs); leverage existing partnerships and new portfolios across new geographies and emerging technologies; and increase the dividend.
? VALUATION On our 2015E estimates, WIN trades at an EV/Sales of 2.1x and an EV/EBITDA of 3.6x versus its comparables trading at 3.2x and 10.5x, respectively. The stock is cheap, and pays a 5.4% dividend while you wait for licensing deals to be signed.
Thesis: Wi-LAN has 280+ licensees of the Company’s patent portfolio of over 4,000 patents covering wireless and wireline access, digital TV and display, semiconductors, medical devices, and cloud computing. WIN also has formed partnerships with companies to jointly license new technologies. The Company has a seasoned management team and a strong balance sheet to support a litigation strategy, if required.
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Rating = Strong Buy with $7.00 target....
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