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Jax Daily Record Monday, Apr. 4, 201612:00 PM EST

ParkerVision court loss sparks new legal strategy

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by: Mark Basch Contributing Writer

ParkerVision Inc.’s five-year-old patent infringement case against Qualcomm Inc. ended last week when the U.S. Supreme Court refused to hear the Jacksonville-based company’s appeal.

However, CEO Jeff Parker doesn’t see it as a loss for the company, which has been developing wireless technology for use in mobile devices.

During ParkerVision’s quarterly conference call with investors last week, Parker said he considers the case in U.S. District Court as an “investment” that led to a new legal strategy.

“What we learned was that we need a means of enforcing our rights that is rapid, more predictable and that still provides what the District Court system has all but eliminated, which is the ability to exclude unauthorized users from importing infringing products into the United States,” he said.

ParkerVision last year filed a complaint with the U.S. International Trade Commission against Qualcomm and three other companies, alleging they are illegally importing products into the U.S. using ParkerVision’s patented technology. Parker said that case is scheduled for trial in August, with a decision due in December.

“Suffice it to say that the key milestones for an ITC action occur in a much faster time frame than a District Court patent case,” he said.

Parker is hoping for a rapid decision because he firmly believes companies are using ParkerVision’s technology without permission.

ParkerVision last week reported minimal revenue of $10,780 and a net loss of $17.1 million for 2015, but Parker still expresses optimism.

“While the past 18 months for ParkerVision have been a bit of a roller coaster ride, we certainly feel that we’re back on a business path that will result in generating a near term sustainable and exciting growth for ParkerVision and will return value to ParkerVision shareholders,” he said.

The company also last week enacted a move that will enable it to keep its listing on the Nasdaq Capital Market, a 1-for-10 reverse stock split.

The company’s stock has been trading well below Nasdaq’s $1 minimum price requirement and the reverse split, in which investors receive one share for every 10 they previously owned, raised the price of the stock from 28 cents at Tuesday’s close to $2.85 at the close of trading on Wednesday.

In the conference call, Chief Financial Officer Cindy Poehlman said it was important to keep the Nasdaq listing.

“ParkerVision’s management and board strongly believe that remaining a quality listed company on the Nasdaq Capital Market exchange brings value to our global licensing and product strategies,” she said.

“Upon achievement of some of our very near term goals … we believe that we will see appropriate gains in our market capitalization that will ultimately prove this to be the right decision for the company.”

The one analyst who follows ParkerVision, Jon Hickman of Ladenburg Thalman, said in a research note Thursday that he sees an “increasingly positive and credible path” for ParkerVision to monetize its intellectual property.

“Going forward, in our view, investors can look for revenues from product sales, engineering services, and royalties from patent enforcement initiatives. Specifically, we anticipate a favorable outcome from the ITC complaint and are basing our valuation on the expectation of royalties beginning late in 2016,” he said.

Hickman maintains a “buy” rating on the stock with an $18.50 price target.

Landstar System lowers forecast

Landstar System Inc.’s CEOs had a unique tradition of providing a “mid-quarter” update to investors on the company’s financial progress, although it usually took place during the third month of the quarter.

New Chief Executive Jim Gattoni ended that tradition last year but last week, Landstar did update its finances in a Securities and Exchange Commission filing and lowered its forecast range for the first quarter.

After previously forecasting earnings of 70 to 75 cents a share and revenue of $720 million to $770 million, the Jacksonville-based trucking company now expects to report earnings of 66 to 70 cents and revenue of $705 million to $725 million.

Landstar said lower-than-expected revenue per load carried by its trucks has affected total revenue. The company also anticipates higher-than-expected insurance claims for truck accidents in the quarter, which would reduce earnings.

Macquarie Research analyst Kelly Dougherty lowered her rating on Landstar from “neutral” to “underperform” after the update.

“Landstar did an admirable job in 2015 against a tough backdrop but we think a repeat performance is highly unlikely,” Dougherty said in her research note.

“We still think Landstar is well-run and set to generate solid free cash flow that can be used for supportive buybacks but it’s tough to see how the stock holds up against an even slower than expected start to the year,” she said.

Landstar’s stock fell $1.93 to $64.82 Wednesday after the lower forecast and Dougherty’s downgrade. It fell as much as $1.07 to $63.75 Thursday morning after Stifel Nicolaus analyst John Larkin downgraded his rating from “buy” to “hold.”

Larkin said in his research note that a change in the U.S. economy could alter his forecasts.

“We are assuming reasonably tight supply/demand dynamics within the truckload industry but not the mother of all capacity shortages, the shortage that has been so eagerly anticipated by Wall Street since the end of the Great Recession,” he said.

Landstar, ParkerVision among top performers

Strangely enough, despite negative news for both last week, ParkerVision and Landstar were two of the top performing stocks among Jacksonville-based companies in the first quarter.

ParkerVision rose 36.1 percent, but that should come with an asterisk because the stock was trading below 40 cents a share for all but two days of the quarter, before the reverse split. So its gains represented pennies per share.

Among more conventionally priced stocks, Rayonier Inc. was the leader with an 11.2 percent rise, followed by Landstar at 10.2 percent.

Landstar’s stock rebounded early in the quarter after reporting strong fourth-quarter earnings.

At the other end of the spectrum, Patriot Transportation Holding Inc. was the worst performer among Jacksonville-based companies, falling 10.1 percent in the quarter.

However, two companies that technically are not headquartered in Jacksonville, but have their top executives located here, did worse. Ameris Bancorp fell 13 percent and General Employment Enterprises Inc. dropped 27.6 percent.

CSX annual meeting in Atlanta

CSX Corp. will hold its annual shareholders meeting in Atlanta on May 11, according to the company’s proxy statement filed last week.

Jacksonville-based CSX moves its meeting to different cities in its railroad network every year, meeting in Richmond, Va., last year.

It last held the annual meeting in Jacksonville in 2004.

The proxy statement shows Chairman and CEO Michael Ward’s total compensation package dropped from about $10.1 million in 2014 to $9.2 million in 2015.

Ward’s base salary was the same and stock awards were also about the same, but he received less in non-equity incentive compensation in 2015.

Fidelity invests more in Ceridian

Fidelity National Financial Inc. last week, through its FNFV Group unit, made an additional investment in Ceridian HCM Holding Inc., a Minneapolis-based provider of human resources technology for businesses.

Jacksonville-based Fidelity, mainly a title insurance company, invests in non-real estate businesses through FNFV and has been a long time investor in Ceridian, holding a 32 percent stake at year-end, according to Fidelity’s annual report.

Fidelity will keep its 32 percent stake by investing another $47.4 million in Ceridian, as part of a total $150 million capital investment announced last week from Fidelity, investment firm Thomas H. Lee Partners and members of Ceridian management.

Ceridian said the investment is being used to fund growth.

Duos Technologies grows revenue

Duos Technologies Group Inc. last week reported 61 percent growth in revenue for 2015 to $6.8 million.

Jacksonville-based Duos, which provides intelligent security analytical technology, became public last year through a merger with an existing public company.

The company reported a net loss of $2.3 million, or 4 cents a share, for 2015, which included $1.6 million in write-offs related to the merger.

In a news release, Duos CEO Gianni Arcaini said he expects 25 percent revenue growth this year “with a goal of operating profits.”

Drone Aviation gets another contract

Jacksonville-based Drone Aviation Holding Corp., for the second time in three weeks, announced a government contract that will increase its revenue.

Drone Aviation, which produces lighter-than-air aerostats and tethered drones, said this contract with the U.S. Department of Defense is valued at $194,000.

The previous contract announced with the Defense Department is worth $780,000.

Drone Aviation reported total revenue of $472,159 in 2015.

ADT gets no other offers

ADT Corp. last week announced the 40-day “go shop” period in its merger agreement with Apollo Global Management LLC expired with no other offers coming in.

So, ADT is moving ahead and expects to complete the deal by June.

Funds affiliated with Apollo agreed in February to buy the security company for $6.9 billion.

ADT employs a total of about 17,000 people at 200 locations, with Jacksonville one of its most significant operations centers with about 2,000 employees.

Under the agreement, ADT will merge with Protection 1, another security company owned by Apollo.

The company will continue to operate under the ADT brand and keep ADT’s headquarters in Boca Raton.

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