Versant Partners wasn’t thrilled with what they saw from Wi-LAN’s (TSX:WIN) Q3 today, but analysts Tom Liston and Justin Kew are still bullish on the Ottawa based patent player.
While Wi-LAN’s Q3 revenue of $27.8-million was an increase of 158 per cent compared to the $10.8-million the company reported in the same period of 2010, it was below Versant’s forecast of $28.3 million, which was slightly less than the Bay Street consensus of $28.7 million. Versant was also disappointed that Wi-LAN management revised its 2011 revenue and EBITDA guidance down.
Versant, however, is maintaining its BUY Rating on Wi-LAN at $8.25 because it finds the valuation attractive. A research update issued today pointed out that the company still trades at a significant discount to peers such as Acacia Research (NASD:ACTG). California-based Acacia currently trades at a price to earnings ratio of 65 and has a market capitalization of $1.43 billion, more than ten times is fiscal 2010 revenue of $131 million.
Versant also thinks “the market will have a greater appetite for Wi-LAN stock once the Mosaid transaction closes. There may be Mosaid investors switching to Wi-LAN as Wi-LAN becomes the sole IP-based licensing play on the TSX. ”
Wi-LAN was recently thwarted in its bid for cross-town rival Mosaid (TSX:MSD). The company had offered shareholders $42, but was bested by US based private equity firm Sterling Partners who, on October 27th, reached a deal to acquire Mosaid at $46 a share, a 9.5% premium to the Wi-LAN bid.
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Wi-LAN, meanwhile, has been one of the biggest Canadian tech successes in recent memory. After trading as low as $1.19 in late October, 2008, the company’s stunning run to nearly $10 this past summer meant it became the most valuable technology concern in Ottawa. Wi-LAN now has more than a thousand patents, and has already licensed their technologies to blue chip techs such as Cisco, Nokia, Panasonic, Samsung. In doing so, the company’s revenue climbed from just over $2 million in fiscal 2006 to over $50 million in 2010, their most recently reported fiscal year.
About Versant Partners: Versant Partners is an investment bank serving institutional money managers and Canadian growth companies. The firm was founded on the belief that companies and investors in high growth industries require specialized industry expertise and services from an investment bank.