SAN FRANCISCO (Thomson Financial) - Shares of Tessera Technologies rallied
Friday after the company announced a settlement of its dynamic random access
memory (DRAM) action against International Products Sourcing Group (IPSG).
Under the settlement, IPSG parent Micro Electronics has taken a license on
Tessera's technology covering chip-scale and multi-chip packaging products. The
company also agreed to pay royalties on all past and future sales of its branded
products using Tessera technology.
IPSG is the first respondent to negotiate a settlement. San Jose,
Calif.-based Tessera currently has an International Trade Commission DRAM action
pending against 13 remaining respondents, with a hearing scheduled to begin
Sept. 22.
Following the announcement of the settlement, Sidoti & Co. reiterated its
buy rating on Tessera shares and its $47 price target, saying the deal may
persuade others to settle before the trial.
"Given TSRA's history of success in litigation and the previously asserted
defensibility of its patents, we are more confident than ever in TSRA's
prospects for successful resolution, which potentially could lend significant
upside to our estimates," Sidoti analyst Kelly Anderson wrote in a note to
clients. "Therefore, we recommend investors take advantage of the share price
weakness to date."
Merrill Lynch analyst Brett Hodess noted that "[w]hile IPSG is only a small
player in this market, so any revenues will not be material, this is an
indication of the strength of TSRAs DRAM claims for the ITC action."
Hodess rates Tessera a buy.
Shares of Tessera rose 9% to $20.25 on volume of 945,000 shares versus a
30-day average volume of 925,736 shares.
Gabriel Madway
gm/vj
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