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Components | December 06, 2011

Tessera expects decrease in revenue for 4Q

Tessera Technologies provided financial guidance for the fourth quarter ending Dec. 31, 2011 and a licensing update.
Fourth quarter 2011 total revenues are expected to be approximately $56.5 million, which compares to third quarter 2011 total revenue of $59.3 million and fourth quarter 2010 total revenue of $80.4 million, respectively.

Fourth quarter 2011 Micro-electronics revenues, which come entirely from Tessera, Inc., a wholly owned subsidiary of the Company, are expected to be approximately $48.5 million. As a comparison, third quarter 2011 royalties and license fees were $50.3 million and fourth quarter 2010 royalties and license fees were $71.2 million.

Apart from one-time items and the impact of volume pricing adjustments Tessera, Inc. has with two of its major DRAM manufacturer licensees, fourth quarter 2011 Micro-electronics revenues are expected to be up approximately $3.0 million sequentially and down approximately $6.0 million as compared to the fourth quarter of 2010.

Fourth quarter 2011 Imaging & Optics revenues, in total, are expected to be approximately $8.0 million, which compares to third quarter 2011 revenue of $9.0 million and fourth quarter 2010 revenue of $9.2 million, respectively.

Fourth quarter 2011 Imaging & Optics royalty and license fees revenues are expected to be approximately $5.0 million, as compared to third quarter 2011 royalties and license fees of $4.9 million and fourth quarter 2010 royalties and license fees of $5.2 million, respectively.

Imaging & Optics products and services revenues are expected to be approximately $3.0 million. This compares to products and services revenue of $4.1 million in the third quarter of 2011 and $4.0 million in the fourth quarter of 2010. The fourth quarter 2011 products and services revenue guidance reflects expected lower sales to the Company's served semiconductor capital equipment market.

Non-GAAP operating expenses for the fourth quarter 2011, excluding litigation expense, are expected to range between $36.5 million and $37.5 million.

Non-GAAP cost of revenues is expected to be down approximately $400,000 to $500,000 sequentially due to lower expected product sales.

Non-GAAP R&D is expected to be up approximately $0.9 million to $1.4 million sequentially as the Company's Imaging & Optics segment, which is operated through the DigitalOptics Corporation subsidiary, anticipates additional non-recurring engineering and material cost and increased personnel to support the continued advancement of its Micro Electrical Mechanical Systems (MEMS) products and related optical technologies.

Non-GAAP SG&A is expected to be up approximately $1.1 million to $1.5 million sequentially due primarily to corporate development activities being performed in pursuit of ongoing investigations of various businesses and technologies that may be strategic to the Company's future business.

Litigation expense in the fourth quarter of 2011 is expected to be flat as compared to the third quarter 2011 litigation expense of $9.1 million as efforts related to the Amkor arbitration, appeals of prior International Trade Commission rulings and other matters continue. 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.

Fourth quarter 2011 stock-based compensation is expected to be approximately $5.3 million and amortization of intangible assets is expected to be $4.7 million.

Operating expenses for the fourth quarter 2011, excluding litigation expense, are expected to range between $46.5 million and $47.5 million.

Licensing Update

Micron Technology, Inc. did not exercise the renewal option in its July 1, 2006 license agreement. Tessera, Inc. does not currently intend to publicly comment on the ongoing business discussions with its customers, including Micron.
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