9/22/2023 0 Comments Tessera technologies value of ip![]() In the words of Starboard’s own proposal, “Action #1” is to “reduce IP cost structure (R&D),” engage contingency fee lawyers (i.e., legal bounty hunters) to “take more assertive action” against customers and licensees, and “file additional infringement claims.” It proposes to eviscerate Tessera’s R&D and rely instead on hyper-aggressive patent troll-style litigation to build revenues. Our stock is up more than 30% since August, and our five-year 54% average operating margin in our IP segment beats all of our peers.īut Starboard’s plan is not simply to cut costs. We have resolved disputes with AMD and Silicon Precision Industries and expect $180-$200 million in annual revenue from our intellectual property business, most of it recurring revenue. ![]() We have a new technology partnership with Dell for our money-saving xFD technology and new long-term licensing agreements with SK Hynix plus a multiyear deal with Samsung to use our advanced face detection software in every Galaxy S4 phone sold worldwide. The results of this turnaround campaign have been encouraging, to say the least. We also shut down a mistaken plan to become a vertically integrated manufacturer of our DigitalOptics camera technology. Since then we have cut costs wherever we can, including in R&D, although we still plan to spend 12% of revenues on R&D in our IP segment. Two seasoned CEOs, Tim Stultz and I, were recruited to the board, and Rick Neely was brought on as CFO. ![]() Today we are deeply engaged in a turnaround campaign, which began last August in part thanks to some justifiable criticisms Starboard made of the way our business was run. And because we choose our battles carefully, when we have gone to court or to arbitration we have been very successful, recouping about $2.70 for every $1 spent on litigation.īut litigation is not our business. But our average annual litigation expense has still been far below that of most technology operating companies. To be sure, at times we have been forced to litigate to enforce our licensing agreements or to stop the infringement of our patented technologies. They, too, concentrated on invention and for the most part left the commercialization of their inventions to enterprises with the requisite manufacturing and other resources needed to build and sell products successfully. Industrial Revolution of the nineteenth century were. With some 3,000 issued and pending patents, Tessera is a non-practicing entity, or NPE, in much the same way that Thomas Edison and more than two-thirds of all the “great inventors” of the U.S. Customers of our technology have included Intel, Samsung, Micron, SK Hynix, Texas Instruments, and other big manufacturers of semiconductor chips. ![]() Since its founding, in 1990, Tessera has built its success on an invention-plus- licensing business model, a model embraced by R&D firms such as Dolby and by universities like Stanford that license their technology for others to commercialize rather than build products themselves. Starboard is involved in similar coup d'état attempts at other intellectual property-rich firms, and once in charge, its modus operandi is to defund the company’s research and development for a quick gain at the cost of long-term performance-a practice I call cutting down the apple tree to harvest the apples. The upcoming vote pits the newly reconstituted board and turnaround management team at Tessera, a technology development and licensing firm that invented chip-scale packaging (CSP) technology for improved semiconductor performance in the 1990s and is now blazing a trail in advanced semiconductor interconnect technology, against a board takeover attempt by the activist hedge fund Starboard Value LP. ![]()
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