WiLAN Inc. (WILN), the patent monetization company run by CEO Jim Skippen, said its fourth quarter net income fell 78.7% on lower than expected licensing revenue.
Net income fell to $518,000, or zero cents, in the fourth quarter from $2.43 million, or 2 cents a share, the Ottawa, Ontario-based company said in a statement.
The company’s adjusted earnings which include depreciation and amortization, income tax expense fell 29.2% to $12.18 million, or 10 cents, from $17.22 million, or 14 cents.
Shares of WiLAN fell 6.3% or 19 cents to $2.82 after the earnings were released.
The adjusted earnings and revenue figures were "in line" with expectations, said Todd Coupland, an analyst at CIBC Worldwide, who rates WiLAN a "sector underperform."
During the quarter, WiLAN said it signed two license agreements including one with NEC Mobile. The company also entered into a second partnership agreement with ROHM Co. Ltd.
Skippen has been struggling to bring in licensing revenue and shore up the company’s shrinking backlog.
"It was a light quarter in terms of new deal signings with partners," Coupland said. "The gap with the new business model still needs to be filled. This quarter it's good to see them signing up new partners, but we'd like to see more sustainable success that's more than 2% of revenue."
The company’s backlog previously estimated at between $225 million and $325 million has been shrinking by about $20 million a quarter, according Coupland.
WiLAN spokesman Tyler Burns couldn’t be reached immediately for comment.
Skippen said in the statement that WiLAN’s “strategic focus on growing our business through licensing partnerships delivered 17 new partnerships during the year in diverse markets including automotive, medical, and data networking technologies and a number of these partnerships generated millions of dollars in licensing revenue for WiLAN and our partners.”
The company said that for the year its top 10 licenses accounted for 74% of revenue compared with 79% last year.
During the quarter, WiLAN’s litigation expense dropped to $3.47 million from $4.56 million. For the year, litigation expense dropped to $9.9 million from $44.9 million.
For the year, WiLAN posted net income of $9.7 million, or 8 cents a share, compared with a net loss of $18.1 million, or 15 cents a share in 2013. Revenue grew 11% to $98.3 million for the year.
Adjusted earnings for the year were $58.7 million, or 49 cents, versus $17.6 million, or 15 cents, a year earlier.
For the first quarter 2015, the company said it expects revenue to be at least $17.5 million.
Operating expenses for the first quarter are expected to be in the range of $14.4 million to $15.4 million of which $6.3 million to $7 million is expected to be litigation expense. For the first quarter of 2015, adjusted earnings are expected to be in the range of $2.2 million to $3.2 million.
"The outlook for the first quarter is below expectations," Coupland said.
The company told analysts it was close to booking partnerships by the end of the month, he said. "We'll take them at their word. It may help in filling in the gap in the backlog.
WiLAN also said its board agreed to increase the dividend 5% to 5.25 Canadian cents from 5 Canadian cents.
"It's nice to see an increase in the dividend but it doesn't really help with the backlog," he said.
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