Wi-LAN’s 2013 will be better than its 2012, says analyst Nagaraj

Wi-LAN (TSX:WIN) today announced its Q4 and fiscal 2012 results. In Q4, the company posted a topline of $21.2-million. For the year, Wi-LAN’s GAAP earnings revealed a loss of $14.5-million on revenues of $88-million, down from $105.8-million in 2011.

CEO Jim Skippen said the company’s 2012 will help set up its near-term future.

“Our efforts and accomplishments in 2012 advanced key strategies that we believe will drive Wi-LAN’s future growth,” he said. “The sustainable growth of the company’s business demands a disciplined licensing strategy and one that focuses on reaching the right agreements for the company over the long term. We reached agreements with eight companies in 2012 that are expected to generate significant future revenues. Our solid balance sheet with over $176-million in cash and the company’s positive cash flow with adjusted earnings of over $41-million or 47 per cent of revenues in 2012, gives us a strong financial foundation upon which to continue building the company’s business. Wi-LAN’s financial strength enabled the company to return over $14-million to shareholders in dividend payments in 2012 and gave the board the confidence to increase the company’s annual dividend by over 14 per cent to 16 cents in 2013.”

Industrial Alliance Securities analyst Al Nagaraj says because of the absence of upfront fees from major licensing deals, 2012 was a transition year for Wi-LAN. But he says 2013 is shaping up to be a better year, noting that the Ottawa-based company has various legal actions pending against major companies such as Apple, HTC, Ericsson, HP, Dell, Sierra Wireless, BlackBerry and Toshiba. He says Wi-LAN has important patents covering WiFi, CDMA and digital TV technologies and he expects this will translate into success in the courtroom. In a research update to clients this morning, Nagaraj reiterated his BUY rating and $7.70 target on Wi-LAN.

Nagaraj says his target price is based on Wi-LAN’s excess cash and discounted 10× his estimate of the company’s 2014 EBITDA, which he thinks will come in at $97-million.

Also today, Wi-LAN announced its board has approved a share buyback to purchase for cancellation up to 11,847,430 issued and outstanding common shares, which is about approximately 10% of the 118,474,299 shares in the public float.

Shares of Wi-LAN on the TSX closed today up 1.9% to $4.39.

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