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Wi-LAN rises as Q1 results top estimates

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Wi-LAN (TSE:WIN) (NASDAQ:WILN) shares were on the rise Wednesday after the technology IP company reported an adjusted first quarter profit that topped its own forecasts, benefiting from increased revenues and lower litigation expenses. 

For the three months to March 31, the company, which licenses its IP technology to over 280 companies worldwide, reported a net profit of $4.0 million, or 3 cents per share, up from a net loss of $6.4 million, or 5 cents per share, a year ago.

On an adjusted basis, it earned $16.8 million, or 14 cents per share, versus $1.3 million, or 1 cent per share, in the first quarter of 2013. The latest results beat the company's guidance of between $10.6 million to $12.6 million in profit, and topped the analyst estimate of 10 cents per share. 

Revenue also exceeded its views, rising to $26.0 million from $18.4 million, compared to its forecast of $22.6 million and consensus estimates of $23.22 million. The increase is due to the timing of fixed payment amounts as a result of the significant license agreements signed last year.

"Our ongoing effort to expand our business has made significant progress so far in 2014," said president and CEO Jim Skippen. 

"The license agreement signed in our network management program and early activities that we have completed in our semiconductor program have moved these licensing programs forward. 

"Partnerships signed early in the second quarter have driven WiLAN into the large automotive market. With multiple new programs and many other opportunities being evaluated by our team, we see significant growth potential in our business."

Skippen added: "We have begun 2014 with a very strong first quarter. A further reduction in our litigation expenses, due in part to the new shared risk fee model that WiLAN is adopting with counsel, helped WiLAN generate strong adjusted and GAAP earnings in the quarter."

In the first quarter, the company said litigation expenses came to $1.7 million compared to $11.7 million for the same period last year. 

Last week, the Canadian owner of patents for technology used in mobile phones, filed an appeal in a patent dispute with Apple Inc. (NASDAQ:AAPL). On April 3, Judge Rodney Gilstrap of the U.S. District Court for the Eastern District of Texas, ruled that the Jury had no basis for invalidating the 802 patent at the trial of the Wi-LAN vs. Apple lawsuit in October 2013.

"After considering the Court's ruling on April 3, and based on the advice of our counsel McKool Smith, We believe there are strong grounds for an appeal in this case," Skippen said in a statement on April 21. While a formal appeal process could take months before even knowing if it will be heard, the possibility of a stronger position against Apple could provide additional option value in a strategic review.

Wi-LAN is also in litigation with Apple in the Southern District of California concerning the infringement of two patents related to LTE technology. 

For the second quarter, the company said Wednesday it expects revenue to be at least $19.4 million. It declared a dividend of 4 Canadian cents per share for the latest quarter, to be paid on July 3, to shareholders of record on June 13.

Shares of Wi-LAN gained 1.8% on Wednesday late morning, lately trading at C$3.36 in Toronto.

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TSX:WIN
Market: TSX
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