Wi-LAN has lost a battle, not the war, says Stifel Nicolaus

The more than 30% collapse of Wi-LAN’s (Wi-LAN Stock Quote, Chart, News: TSX:WIN) shares following yesterday’s news that it was not successful in its case against Alcatel Lucent, Ericsson, HTC, and Sony, is a buying opportunity for investors, says Stifel Nicolaus analyst Blair Abernethy.

Yesterday, forty-five minutes before market close, Wi-LAN announced that a trial jury in it continuing litigation against Alcatel-Lucent USA Inc., Ericsson Inc., HTC Corp. and Sony Mobile Communications in the U.S. District Court for the Eastern District of Texas, Tyler Division, determined that the four patents in suit were found not infringed. Certain claims in three of the four patents, said Wi-LAN were found invalid.

The Ottawa patent-player said it was disappointed and would review its options.

Abernethy says that while the outcome is certainly disappointing, the case is far from over. He believes there is a “high likelihood” that Wi-LAN will appeal the verdict. In a research update to clients following the news, Abernethy maintained his BUY rating on Wi-LAN, while lowering his target by fifty cents to $5.50, down from his previous target of $6.

The Stifel Nicolaus analyst says the lower target reflects a delayed and lower expected contribution to revenue from defendants in this case. He had penciled in $4-million in revenue in fiscal 2013, and $12-million in 2014. He is now modeling zero revenue from the case in 2013 and $4-million in 2014.

Abernethy notes that Wi-LAN’s broader goal; to license multiple patents from its portfolio of more than 3000, does not change with this verdict, and it is free to initiate further legislation to secure licenses.

At press time, shares of Wi-LAN were rebounding, up 13.9% to $3.76 on the TSX.

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