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Components | September 12, 2011

Tessera expects 3Q revenue to reach 60 million

Tessera Technologies expects 3Q/2011 total revenues to be approx. USD 60 million, which compares to 2Q/2011 total revenue of USD 70.7 million and 3Q/2010 total revenue of USD 82.1 million, respectively.
Third quarter 2011 Micro-electronics revenues, which come entirely from Tessera, Inc., a wholly owned subsidiary of Tessera Technologies, Inc., are expected to be approximately USD 50 million. As a comparison, second quarter 2011 royalties and license fees were USD 60.5 million and third quarter 2010 royalties and license fees were USD 72.0 million.

Apart from one-time items and the impact of volume pricing adjustments Tessera, Inc. has with two of its major DRAM manufacturer licensees, third quarter 2011 revenues are expected to be flat sequentially and down approximately USD 5 million as compared to the third quarter of 2010, due to lower year-over-year units reported in aggregate by Tessera, Inc.'s licensees.

Third quarter 2011 Imaging & Optics revenues, in total, are expected to be approximately USD 10 million, which compares to second quarter 2011 revenue of USD 10.2 million and third quarter 2010 revenue of USD 10.1 million, respectively.

Third quarter 2011 Imaging & Optics royalty and license fees revenues are expected to be approximately USD 5 million, as compared to second quarter 2011 royalties and license fees of USD 4.9 million and third quarter 2010 royalties and license fees of USD 4.0 million, respectively.

Imaging & Optics products and services revenues are expected to be approximately USD 5 million. This compares to products and services revenue of USD 5.3 million in the second quarter of 2011 and USD 6.1 million in the third quarter of 2010, respectively. The third quarter 2011 products and services revenue guidance reflects expected lower sales to the company's served semiconductor capital equipment market than in the prior and year-ago quarters.

Non-GAAP operating expenses for the third quarter 2011, excluding litigation expense, are expected to range between USD 38 - 39.5 million, and include an expected restructuring charge in the range of USD 2.0 - 2.5 million related to the closure of the company's Yokohama Japan development facility, which was announced on Aug. 25, 2011.

Non-GAAP cost of revenues is expected to be up approximately USD 200'000 - 400'000 sequentially, due to changes in product mix.

Non-GAAP R&D is expected to be up approximately USD 1.6 - 2.0 million sequentially as the company anticipates additional non-recurring engineering and material cost and increased personnel to support the continued advancement of its Micro Electrical Mechanical Systems (MEMS) products.

Non-GAAP SG&A is expected to be up approximately USD 300'000 - 700'000 sequentially.

Litigation expense in the third quarter of 2011 is expected to be significantly above the second quarter 2011 litigation expense of USD 7.2 million due to efforts related to the Amkor arbitration, the Hynix antitrust action, the UTAC (Taiwan) breach of contract case, the Sony and Renesas Electronics Corporation patent infringement cases, and legal activity related to matters pending in the U.S. Court of Appeals for the Federal Circuit and the U.S. Supreme Court. Tessera, Inc. continues to pursue legal redress based on its long standing practice of ensuring fair payment for use of its IP and protecting its licensees in good standing. The timing of resolution of these litigation and arbitration matters is difficult to predict.

Third quarter 2011 stock-based compensation is expected to range between USD 5.5 - 6.0 million and amortization of intangible assets is expected to be USD 4.3 million.

Operating expenses for the third quarter 2011, excluding litigation expense, are expected to range between USD 47.8 - 49.8 million on a GAAP basis. This range includes the expected restructuring charge related to the closure of the company's Yokohama Japan development facility.

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