Wi-LAN sues Research in Motion, Byron Capital Reiterates $7 Buy Target

Last Friday, in a U.S. district court in Florida, Ottawa's Wi-LAN launched a patent suit against Research in Motion.

On Friday, about forty-eight hours before the surprising news broke that Thorsten Heins was named new CEO of Research in Motion, the company was sued by Ottawa’s Wi-LAN.

Wi-LAN alleges RIM infringed its U.S. Patent No. 5,515,369 and U.S. Patent No. 6,232,969, which relate to blue tooth technology, and the “SYM” or Symbol key, respectively.

Wi-LAN, of course, is no stranger to patent infringement claims, having launched actions against dozens of multinationals, including Apple, Hewlett-Packard, Intel, Sony and Toshiba.

Byron Capital analyst Tom Astle says that although the patent monetization space was one of the hottest stories of 2011, it seems to be showing no signs of slowing down in 2012. In a morning note to clients today, Astle pointed out that Wi-LAN’s American-based peer Acacia last week made a patent purchase from a firm called Adaptix for $160 million.

Wi-LAN’s recent patent acquisitions, says the Byron Capital analyst, don’t make as much of a media splash as some others, but Ottawa’s largest tech stock 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.

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This story is brought to you Zecotek Photonics (TSXV:ZMS). As of November 16, 2011, Zecotek owned title to or controlled more than 55 patents and applications. Click here to learn more.

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Despite this, Wi-LAN’s valuation remains significantly below that of its peers, he says. Wi-LAN has 30% of its market-cap in cash, and strong double digit revenue growth, yet trades at just 7.8 times 2012 earnings. Many of its peers, like Interdigital (NASDAQ: :IDCC), RPX (NASDAQ:RPXC) and the aforementioned Acacia (NASDAQ: ACTG) trade at well over twenty times 2012 earnings.

Wi-LAN has climbed from just over $2 million in fiscal 2006 to nearly $50 million in 2010. The company’s revenue for just the first three quarters of 2011 was nearly $82 million. The company reports it annual results on March 7th.

Astle today reiterated his BUY rating on Wi-LAN. His $7 target on the stock is based on fifteen times what he believes adjusted 2013 earnings per share will be.

Shares of Wi-LAN on the TSX closed today up 4.5% to $5.58.

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