Around the same time that a federal appeals court was hearing arguments in ParkerVision Inc.’s patent infringement lawsuit against Qualcomm Inc. on May 8, a selloff of ParkerVision’s already beaten-down stock began.
Did something bad happen to Jacksonville-based ParkerVision in that hearing? It’s difficult to say.
ParkerVision is appealing a federal judge’s decision last year to overturn a jury’s verdict that awarded the company $173 million in the lawsuit.
ParkerVision has alleged Qualcomm has been illegally using the company’s patented wireless radio technology in its products.
The Court of Appeals for the Federal Circuit in Washington, D.C., heard arguments in that Friday hearing but did not make any rulings.
As it happened, ParkerVision had scheduled its regular quarterly conference call with investors for the following Monday, May 11.
In that call, CEO Jeff Parker said he didn’t want to make any predictions on the outlook for his appeal, based on the hearing.
“I’m not in the business of reading the tea leaves and making such predictions, so I’m not going to do that,” he said.
Parker did give a detailed account of the questions the appellate judges had. The questions and answers were very technical in nature and likely over the head of most laymen, but somebody heard something that prompted investors to bail out of the stock.
ParkerVision’s stock fell sharply last year after its $173 million award was thrown out, and it has been trading below $1 in recent weeks. But the stock fell by another 27 cents to 39 cents May 8, a 41 percent drop, with more than 4 million shares traded. That is more than 10 times the normal trading volume in the stock.
“In terms of what prompted the (May 8) selloff, I don’t know,” Parker said.
Parker said he first noticed the stock drop when he checked his phone after leaving the courtroom.
“Unless somebody had a microphone into the room, I assume it must have been from somebody who was there, (who) must have either called somebody or did something that stimulated that,” he said.
“Was that person, if that what’s happened, correct in their call? I guess we’ll find out when we get the ruling,” he said.
“In our view, the activity in the stock was in response to the number and the technical nature of the questions directed at the ParkerVision attorney, Mr. (Donald) Dunner, during the hearing,” Ladenburg Thalmann analyst Jon Hickman said in a research report.
“We believe investors attending the hearing became concerned that the questions (and Mr. Dunner’s answers) pointed to the court favoring the Qualcomm position,” he said.
Meanwhile, ParkerVision reported another quarter with no revenue and a net loss of $5.8 million, or 6 cents a share, for the first quarter.
However, the company stuck to its forecast that it will see some revenue in the second quarter, as potential customers buy ParkerVision components to test in their products.
“As we mentioned in our last call, we anticipate reporting some initial revenue from these activities in the second quarter, and that still appears to be the case. I look forward to sharing with you some of the applications that our chips and our engineering expertise will be used in,” Parker said.
ParkerVision says its technology can be used by manufacturers to improve the performance of wireless products.
Hickman, the only analyst following ParkerVision, said he maintains a favorable, but cautious, outlook for the company’s patent litigation.
“Again, we remain confident in our view that there remains significant potential for ParkerVision as an investment opportunity in the longer-term and we reaffirm our ‘buy’ rating and $5.25 price target,” he said.
Black Knight details stock distribution
Fidelity National Financial Inc. did not launch the initial public offering of its Black Knight Financial Services Inc. unit last week, as company officials had hoped.
However, the IPO is expected to hit the market this week, and Black Knight did give more details of the stock sale last week in a Securities and Exchange Commission filing.
Black Knight, a mortgage technology and analytics company, is majority owned by Jacksonville-based Fidelity, with investment firm Thomas H. Lee Partners owning a minority stake. Fidelity will retain majority control after the IPO.
The filing said Black Knight expects to sell 17 million shares of Class A common stock at $22 to $25 a share.
After the sale, the public will own 38.7 percent of the Class A stock, with Thomas H. Lee owning the other 61.3 percent.
Fidelity will own 98.2 percent of Black Knight’s Class B stock, which will have greater voting power than the Class A shares. That’s how Fidelity will retain control.
Fidelity will have 55.9 percent of the voting power through its Class B shares. Thomas H. Lee, which will own 1.8 percent of the Class B shares in addition to its Class A shares, will have 27.4 percent of the voting power. Public shareholders will be left with 16.7 percent voting power.
As always, nothing is simple with Fidelity’s deal-making machine.
Most of the proceeds from the stock sale will be used by Black Knight to pay off debt.
McKesson happy with PSS progress
Two years after its $2.1 billion acquisition of Jacksonville-based PSS World Medical Inc., McKesson Corp. CEO John Hammergren is happy with the results.
“We have now completed year two of our three-year PSS World Medical integration plan and I’m pleased to report the team continues to meet or exceed expectations on all fronts,” Hammergren said during McKesson’s quarterly conference call last week.
He said the integration has produced “significant efficiencies in our IT and distribution infrastructure while maintaining the exceptional level of service our customers expect.”
The PSS business falls under the medical-surgical division of San Francisco-based McKesson. That division, which distributes medical supplies and equipment, grew revenue by 5 percent in the fiscal year ended March 31.
McKesson, which provides a range of services for the healthcare industry, said total revenue in the fiscal year rose by 30 percent to $179 billion. Adjusted earnings per share rose 29 percent to $11.11 in fiscal 2015.
McKesson is projecting fiscal 2016 earnings to grow to $12.20 to $12.70 a share.
CSX sees earnings flat or slightly higher
CSX Corp. Chief Financial Officer Fredrik Eliasson told an investor conference last week that second-quarter freight volume on its railroad “is tracking slightly below expected levels due to very strong comparisons to last year,” according to a company news release.
“However, thanks to improving service levels and asset utilization, the company still expects second quarter EPS growth that is flat to slightly up compared to last year,” it said.
CSX is still projecting mid-to-high single-digit percentage earnings growth for the full year, Eliasson said at the conference in Boston sponsored by Bank of America Merrill Lynch.
FRP promotes deVilliers
FRP Holdings Inc. last week said in an SEC filing that Vice President David deVilliers was promoted to the position of president.
CEO Tom Baker had previously held the additional position of president at the Jacksonville-based commercial real estate development company.
FRP in January spun off its transportation business, Patriot Transportation Holding Inc., as a separate public company. Baker also serves as CEO and president of Patriot.
Analyst upgrades Rayonier to ‘buy’
Despite expectations of “lumpy” earnings this year, D.A. Davidson analyst Steven Chercover upgraded his rating on Jacksonville-based Rayonier Inc. from “neutral” to “buy.”
“While the first quarter was ahead of expectations, full year numbers will be little changed, as real estate is notoriously lumpy (contingent on the timing of closures) and forest resources is encountering different dynamics in different geographies,” Chercover said in his research note.
“Lumpy” is the same term Peter Rummell once used to describe earnings at The St. Joe Co., when he was running that real estate development company.
Anyway, Chercover said he upgraded Rayonier because its stock was trading at a 3.8 percent dividend yield, a 28 percent discount to its net asset value and a 21 percent discount to his price target.
Chercover also said he is encouraged by the real estate and timber company’s direction, despite a “choppy launch” since the company spun off its performance fibers division.
“The company has been enhancing its disclosure, and prioritizing its real estate portfolio to focus on low hanging fruit, while diminishing sales of all but the most non-strategic timberland. We applaud the approach, as selling land while trying to grow the portfolio seems a little counterproductive — although some pruning is inevitable,” he said.
Web.com gets second upgrade
Deutsche Bank analyst Deepak Mathivanan last week upgraded Web.com Group Inc. from “hold” to “buy,” becoming the second analyst to upgrade the Jacksonville-based company since its first-quarter earnings report.
Mathivanan said in his research report that Web.com “has the best risk/reward in the website presence and tool provider space,” with the stock down 40 percent from its peak last year.
Web.com, which provides website development services for businesses, fell sharply last year after a series of disappointing earnings reports.
“We think the reset is largely behind Web.com at this time and expect to see stable growth sequentially in 2015,” Mathivanan said.
“Consistent performance should restore confidence, allow for upward revisions to estimates and multiple expansion — we view this backdrop as very favorable,” he said.
Mathivanan set a $28 price target for the stock, which was trading at $22.73 at the time of his report.
The previous week, Roth Capital Partners analyst Jeff Martin upgraded Web.com from “neutral” to “buy.”
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