Tessera Technologies Announces Third Quarter 2010 Results

SAN JOSE, Calif. — (BUSINESS WIRE) — October 28, 2010 — Tessera Technologies, Inc. (Nasdaq: TSRA) announced its results for the third quarter ended Sept. 30, 2010.

Third quarter 2010 total revenues of $82.1 million were up 24% compared to the third quarter of 2009. The company’s two business segments, Micro-electronics and Imaging & Optics, were up 22% and 42% respectively in the third quarter of 2010 as compared to the third quarter of 2009.

Revenue Highlights: Third Quarter 2010

  • Total revenues were $82.1 million.
  • Micro-electronics revenues were $72.0 million.
  • Imaging & Optics revenues were $10.1 million.

Third quarter 2010 Micro-electronics revenues were $72.0 million, compared to third quarter 2009 Micro-electronics revenues of $59.1 million, and were comprised entirely of royalties and licenses. Third quarter 2010 Imaging & Optics revenues were $10.1 million, comprised of $4.0 million in royalties and license fees, and $6.1 million in products and services. This compared to third quarter 2009 Imaging & Optics revenues of $3.7 million in royalties and license fees, and $3.3 million in products and services, for a total of $7.0 million.

Generally accepted accounting principles (GAAP) net income for the third quarter of 2010 was $19.0 million, or $0.38 per diluted share, which included non-cash charges of $6.9 million for stock-based compensation and $3.6 million for amortization of acquired intangibles.

Non-GAAP net income for the third quarter of 2010 was $27.0 million or $0.52 per diluted share. Non-GAAP net income is defined as income and operating expenses adjusted for acquired intangibles amortization, charges for acquired in-process research and development, stock-based compensation expense, impairment charges on long-lived assets, and related tax effects.

“We had record recurring revenue in the third quarter of 2010,” said Henry R. Nothhaft, Tessera’s chairman and chief executive officer. “Cash, cash equivalents, and investments increased $36.2 million in the quarter, resulting in $474.0 million at the end of the third quarter of 2010. Excluding settlements, we believe our full year 2010 total revenue will be up between 18% and 19% over full year 2009 total revenue, due to the expected growth in our primary served markets of DRAM and mobile wireless devices.

“We have decided to discontinue further development of our Wafer-Level Optics for camera modules due to the diminished revenue opportunity for this technology under a license and royalty business model. Pursuant to our long-term vision of more product opportunities in our Imaging & Optics business segment, we intend to repurpose resources formerly dedicated to Wafer-Level Optics to high-value, product-based opportunities such as consumer Micro-Optics,” concluded Nothhaft.

Revenue Highlights: Nine-month Period Ended Sept. 30, 2010

  • Total revenues were $221.0 million.
  • Micro-electronics revenues were $192.9 million.
  • Imaging & Optics revenues were $28.1 million.

GAAP net income for the nine-month period was $44.0 million, or $0.87 per diluted share. Non-GAAP net income for the nine-month period was $68.1 million, or $1.33 per diluted share.

Fourth Quarter 2010 Financial Guidance

Fourth quarter 2010 total revenues are expected to range between $76 million and $79 million, which represents an increase of approximately 35% to 40% over fourth quarter 2009 total revenues of $56.5 million.

Fourth quarter 2010 Micro-electronics revenues are expected to range between $65 million and $68 million, all of which will be royalties. This guidance includes $6 million Tessera expects to receive from UTAC as a result of the settlement, in the first quarter of 2010, of the breach of contract litigation Tessera filed against UTAC. As a comparison, the fourth quarter of 2009 Micro-electronics royalty and license fees revenues were $48.5 million.

Fourth quarter 2010 Imaging & Optics revenues, in total, are expected to be approximately $11 million. Fourth quarter 2010 Imaging & Optics royalty and license fees revenues are expected to be approximately $5 million. Imaging & Optics products and services revenues are expected to be approximately $6 million. This compares to Imaging & Optics royalty and license fees revenues of $3.3 million and products and services revenues of $4.7 million in the fourth quarter of 2009, which totaled $8.0 million for this segment.

Non-GAAP operating expenses for the fourth quarter of 2010 are projected to range between $36 million and $37 million, excluding litigation expenses.

In connection with the cessation of the development of Wafer-Level Optics, in the fourth quarter of 2010 Tessera will recognize a charge of between $3 million and $4 million to write off the net carrying value of certain long-lived fixed assets.

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