Wi-Lan: Patents and Profits

Focus: GLOBAL

Benj Gallander Image Benj Gallander President, Contra the Heard

It has been quite difficult for us to find much value in the market for the past six months or so, explains value investing specialist Benj Gallander, editor of Contra the Heard.

Fortunately, we are stock pickers, so while we remain wary of the overall market and the heights that it has achieved, cherry picking savory investments is our forte.

Thus, during December, in the heart of tax-loss season when we often strike, Wi-LAN Inc. (WILN) was purchased for $1.98 a share.

This Ottawa-based company that was founded 25 years ago is in the intellectual-property biz, via both development and purchasing. It then licenses the technology to other companies.

Since chief executive officer Jim Skippen came aboard in 2006, he has completed agreements with more than 300 enterprises, which equates to deals worth over $900-million. It seems like new accords are announced every month or so.

Alas, often Wi-LAN engages in litigation to protect its patents — currently the enterprise is engaged in about 60 lawsuits. That is anathema to our collegial way of doing business, yet not enough to discourage us from warily throwing dollars in this corporation’s direction.

Wi-LAN’s stock price has taken a beating. In 2011 it traded above $9. From this angle the drop seems exaggerated. In the most recent quarter, the company had revenues of slightly better than $30-million.

Net income was $8.6-million, which worked out to 7 cents a share. Cash and its equivalents registered $108-million.