Wi-LAN may return cash to shareholders, says Cantor Fitzgerald’s Kew

Yesterday, Wi-LAN’s board announced it had initiated a process to “explore and evaluate a broad range of strategic alternatives for the company to enhance shareholder value”.

While most investors normally take such verbiage as code for “sell the company”, Wi-LAN says it could simple mean a change to its dividend or a joint venture.

Kew says the move is a positive for shareholders because he believes the floor value of Wi-LAN is (U.S.)$3.40 a share, which is higher than its recent closes. He says he can envision a plan that would see the board dividending out $60-million, or (U.S.) $0.50 per share or more to shareholders. In a research update to clients yesterday, Kew maintained his BUY recommendation and (U.S.) $4.80 one-year target price on the stock.

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Last Wednesday, a jury in Texas found that Wi-LAN’s U.S patent number RE37,802 was not found infringed upon by Apple. Shares of the Ottawa patent player fell 25% the following day, and have continued to trickle off.

Kew says the movement on the stock is an overreaction, noting that Wi-LAN has about $1.31 in cash and $2.07 a share in revenue from existing license agreements. He says his $3.40 base price on the stock is what the company is worth if it closed shop today, and does not include the value of its patents or cash from license renewals.

At press time, shares of Wi-LAN on the Nasdaq were down down .3% to $3.15.

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