ParkerVision Inc. was awarded $173 million in damages from Qualcomm Inc. last month by a federal jury in Orlando, but Chairman and CEO Jeff Parker sees that as only the beginning.
The $173 million was for past damages, but the verdict in the company's patent infringement lawsuit also gives ParkerVision an opportunity to reap future royalties from Qualcomm.
During the Jacksonville-based company's quarterly conference call with investors last week, Parker said those royalties should equal at least $60 million a year for the next decade.
The jury decided that Qualcomm has been manufacturing products using ParkerVision's patented wireless technology. ParkerVision will be filing a motion with the judge in the case seeking an injunction prohibiting Qualcomm from continuing to use the technology, or for Qualcomm to pay royalties if it continues to use it.
Parker thinks Qualcomm will not stop using the technology.
"We believe it is clear, based on Qualcomm's witnesses' own testimony, that Qualcomm currently does not have any non-infringing alternatives available, and the development of a non-infringing alternative would take years," he said.
Therefore, Qualcomm should pay royalties for its use of ParkerVision's patents, which run through 2022, he said.
Based on testimony at the trial, Parker said Qualcomm is shipping more than 250 million units a year using the technology, and the jury awarded ParkerVision 23 cents per unit for previous use of it. That would equate to almost $60 million a year for ParkerVision, but the company will argue for a higher royalty rate.
"We will be requesting that the court enhance the rate found by the jury since Qualcomm's post-verdict infringement will unquestionably be willful," Parker said.
The downside to all this for ParkerVision is that the company hasn't seen any money yet and even the $173 million awarded by the jury could be overturned on appeal. While Parker is confident the company will ultimately win in appellate court, he acknowledged the process could take more than a year if Qualcomm continues to fight.
In the meantime, ParkerVision is still losing money. The company last week again reported no revenue for the third quarter and a net loss of $6.4 million, or 7 cents per share.
ParkerVision is continuing to work on deals to license its wireless technology to other manufacturers, and Parker said the results of the Qualcomm trial will help its efforts.
"With a favorable verdict in District Court behind us, we believe the path is clear for ParkerVision to become an active and rightful participant in the wireless market and to secure our place in the ecosystem that makes the wireless marketplace the economic powerhouse it has become," he said.
Einhorn claims victory over St. Joe
After The St. Joe Co. announced an agreement to sell 382,834 acres of timberland in the Florida Panhandle for $565 million, hedge fund manager David Einhorn is claiming victory, according to The Wall Street Journal.
Three years ago, Einhorn sent St. Joe's stock plummeting when he made a presentation at an investor conference arguing that St. Joe's land holdings were overvalued.
The sale agreement values St. Joe's timberland at $1,476 an acre. Einhorn had been estimating the value of St. Joe's holdings at $1,500 an acre, so he told the Journal last week that this deal vindicates his position.
"This transaction crystallizes the value of St. Joe," he said.
The only problem with Einhorn's claim is that St. Joe will still have 184,000 acres of land left for development after the timberland sale, and that property will almost certainly have a higher value than the timberland.
Raymond James & Associates analysts Buck Horne and Paul Puryear said the timberland sale will help St. Joe.
"We view the deal as a positive step towards simplifying the St. Joe story and allowing management to fully focus its efforts on core real estate development," they said in a research note last week.
However, Horne and Puryear, who have criticized St. Joe's limited disclosures in the past, said there are still unanswered questions.
"Clarity on the structuring and tax implications of the deal were not given on the (conference) call. Unsurprisingly, management was unwilling to deliver any more details as the sale is a 'real estate transaction' and is yet to be completed," they said.
St. Joe chairman proposes mortgage plan
When Einhorn attacked St. Joe, Bruce Berkowitz, head of St. Joe's largest shareholder, Fairholme Capital Management, jumped to the company's defense. Berkowitz eventually became chairman of St. Joe's board of directors.
Berkowitz made an even bigger splash last week by proposing a buyout of the mortgage-backed securities insurance business of the two federal government-chartered mortgage agencies, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corp. (Freddie Mac).
Under Berkowitz's proposal, the two businesses would be capitalized with $34.6 billion in preferred stock already owned by investment firms and another $17.3 billion in new preferred stock, a total of $52 billion.
According to Bloomberg News, Fairholme is currently the largest holder of those preferred shares.
Berkowitz's proposal basically creates two private companies to run the businesses that insure mortgage-backed securities, and allows the government to liquidate the remaining assets of Fannie Mae and Freddie Mac.
Financial news outlets said it is unlikely that government officials would accept the plan.
Fortegra reports flat earnings
Fortegra Financial Corp. last week reported third-quarter earnings of 19 cents a share, unchanged from last year.
"Our third quarter was a productive one despite the continued challenges in the market from the regulatory overhang we have previously discussed and an economy that is still not cooperating," Chairman and CEO Richard Kahlbaugh said in the company's conference call.
"As I've outlined on past calls, I expect these challenges to continue. We continue to execute our strategy to address this reality," he said.
Jacksonville-based Fortegra provides services for insurance companies and has been expanding its businesses lines, including two acquisitions last year of 4Warranty, a warranty and extended service contract administrator, and ProtectCELL, which provides protection plans for mobile wireless devices.
"Given the challenging regulatory environment, the company is focused on operating flexibility. We must be nimble enough to adapt to market conditions. Fortunately, our company is structured in a way that allows us to be nimble," Kahlbaugh said.
He also said Fortegra is making progress on expense control, reducing its operating expenses by almost 7 percent over the last year.
"I've made it clear to the entire organization that we must remain focused on expenses and that message has without question been heard. However, we will continue to spend where we think it is essential to fulfill our long-term strategic plan of becoming the industry leader of revenue enhancement products," he said.
FBR Capital Markets analyst Randy Binner said after the report that he is maintaining an "outperform" rating on Fortegra's stock.
"Despite growing pains and margin pressure, we continue to believe the market does not fully appreciate the basic story here, which is that Fortegra is an insurance services company that is focused on generating fees rather than taking on underwriting risk," Binner said in a research note.
"We believe this enables safer growth, relative to life and property/casualty insurers, given low interest rates and pricing/reserve uncertainties in the P/C market," he said.
William Blair & Co. analyst Adam Klauber said he is maintaining a "market perform" rating, but he is optimistic about the company's future.
"While 2013 has been something of a tough year for the legacy Fortegra businesses, we believe the company will look to continue diversifying its revenue base and that ProtectCELL and 4Warranty should continue to show positive momentum heading into next year," Klauber said in his report.
Dick's Wings owner near 2 'major' deals
American Restaurant Concepts Inc., the franchisor of the Dick's Wings & Grill chain, said last week it expects to complete "at least two major transactions" by the end of the year.
One of those deals is a "quickly growing yogurt chain that has 20 locations in Florida," CEO Richard Akam said in a news release. That deal is expected to close later this month.
The company did not give details on the other transaction.
American Restaurant Concepts currently franchises 16 Dick's restaurants and said it "intends to continue opening additional Dick's Wings restaurants in Florida and other locations across the country."
The company reported a third-quarter net loss of $300,417, or 6 cents a share. Akam said increased operating expenses caused the loss.
"These expenditures were necessary and were associated with the growth of the company and our preparation for major transactions that we intend to make over the next few months," he said.
American Restaurant Concepts also said it completed a 1-for-7 reverse stock split on Nov. 4, in which shareholders received one share of stock for every seven they previously owned.
That transaction raised the trading price of the stock from below 30 cents to about $2.
Jacksonville Bancorp reports profit
Jacksonville Bancorp Inc. reported third-quarter earnings of $147,000, or 3 cents a share, reversing a loss in the third quarter of 2012.
The parent company of The Jacksonville Bank said its total assets fell to $514.5 million at the end of the quarter, down from $551.6 million a year earlier, due to its strategy to "accelerate the disposition of substandard assets."
That strategy reduced its level of non-performing assets to 4.66 percent of total assets at the end of the quarter, down from 7.21 percent a year earlier.
Interline sales up
Interline Brands Inc. last week reported third-quarter sales rose 20.4 percent to $421.5 million, helped by an acquisition. The Jacksonville-based distributor of maintenance, repair and operations products said organic sales rose by 3 percent.
Interline, which was acquired last year by two private equity firms, reported operating income of $4.1 million but a final net loss after interest expenses of $7.2 million.
"We are encouraged by the fact that growth accelerated across all of our facilities maintenance end-markets during the quarter, in spite of what continued to be an overall sluggish macroeconomic environment," Chairman and CEO Michael Grebe said in a news release.
"Our performance during the quarter was aided by certain key investments in our sales team and capabilities, including under-penetrated market expansion and bundling our product suite to better fit the needs of our national account customers. We also benefited from improving trends in the housing market, which lead to additional repair, remodel and replacement activity among homeowners and property managers," he said.
(904) 356-2466