Cantech Letter Investment Snapshot: Wi-LAN (TSX:WIN)

Wi-LAN, which founded in Ottawa in 1992, developed a range of communications and consumer electronics products including routers, 3G handsets and WiMAX base stations. The Company now has more than three-thousand patents, and has already licensed their technologies to blue chip techs such as Cisco, Nokia, Panasonic, Samsung.

Wi-LAN sprung to life after MOSAID employee Jim Skippen was unsuccessful in convincing his employer to become a pure patent play, and left for Wi-LAN, from whom he was negotiating the purchase of patents. The company is now no stranger to patent infringement claims, having launched actions against dozens of multinationals, including Apple, Hewlett-Packard, Intel, Sony and Toshiba.

Under Skippen’s watch, the company’s revenue has climbed from just over $2 million in fiscal 2006, to the more than $100 million in fiscal 2011. Wi-LAN has quietly become one of the world’s top patent acquirers, on par or better than Apple, Google and Samsung in the third quarter of 2011.

The Numbers

1. Price to sales: 5.86 x Sales
Wi-LAN has shares 121.6 million outstanding. The company’s share price as of Thursday, April 5th was $5.10. This gives the company a market capitalization of $620-million. Wi-LAN’s fiscal 2011 revenue was $105.81-million

2. Cash to Market Cap: 69.9%
As of December 31st, 2011 Wi-LAN had $433.71-million in cash and short term investments. The company’s market cap, as of April 5th was $620-million.

3. Long Term Debt to Market Cap: Zero
As of December 31st, Wi-LAN had zero long term debt

4. Three year annualized growth rate: 35.6%
Wi-LAN’s fiscal 2008 revenue of $26.8-million grew to $105.8-million in fiscal 2011.

5. Price to Earnings Ratio: 19.7
Wi-LAN’s Diluted EPS Excluding Extraordinary Items was $.26 cents. The stock price, as of April 5th was $5.10.

The Analysts

Wi-LAN is covered by several analysts, including Cannacord’s Eyal Ofir, Todd Coupland of CIBC World Markets, Mark Argento of Craig-Hallum Capital Group, Jonathon Skeels of Davenport & Company, Dev Bhangui of Fraser Mackenzie, and Ralph Garcea of NCP Northland Capital Partners.

Byron Capital’s Tom Astle has a BUY rating and $7 target on Wi-LAN. Astle estimates that Wi-LAN will post revenue of $106 million in 2012 and an adjusted EPS number of $0.55 cents per share. In a recent report Astle said he believes “the new and current patent portfolio combined with current and upcoming licensing (litigation) activity could drive revenue growth significantly in 2013, where we are modelling about 25% revenue growth.” Versant Partners analyst Tom Liston also has a BUY rating and $7 target on Wi-LAN.

The Interview

Click here for Cantech Letter’s interview with Wi-LAN CEO Jim Skippen.