WILAN Inc. (WILN), the patent licensing company run by CEO Jim Skippen, said it posted a net loss of $4.76 million in the first quarter on lower revenue and higher expenses.

The net loss of 4 cents a share compared with a profit of $3.97 million, or 3 cents a share a year earlier, the Ottawa, Ontario-based company said in a statement.

Shares of Wi-LAN gained 4.99 cents to $2.52 in late morning trading. They've traded between $2.38 and $4.01 over the past year.

Adjusted earnings, which include unrealized foreign exchange losses, depreciation and amortization and stock based compensation, fell 60% to $6.8 million from $16.8 million.

The adjusted earnings "were better than expected," said Robert Young, an analyst at Canaccord Genuity in Toronto, who rates Wi-LAN a "speculative buy" and has a $4 price target. "Every day there's negative news in the patent space. It's a dirty business."

Indeed, Congress is currently considering several pieces of legislation that could make it harder for licensing companies to bring infringement actions against defendants. The reform legislation would mandate the awarding of attorneys fees to the prevailing party, allow those financing litigation to be liable for such fees and require higher pleading standards.

Even so, Young said WiLAN's business is relatively stable. He said it's a play on a large backlog of licensing deals. He noted the company signed a renewal with Texas Instruments during the quarter, which should show up in the second quarter numbers.

"It has a very good dividend, a very good cash position and a good pile of patents that are valuable. They make a lot of money for people who want yield."

Revenue fell 18% to $20.4 million from $26 million. The company attributed the decrease in revenue primarily to the timing and amount of fixed payments.

Revenue has now declined in five consecutive quarters, which led to some discussion on a conference call with analysts.

Skippen attributed the decline in revenue to the lumpiness of WiLAN's business.

"I agree that five consecutive quarters of declining revenue looks like a trend," Skippen said on the call. "We're hoping it's not and ends soon."

The cost of revenue increased 33% to $19.5 million from $14.6 million in the three month period ended March 31, 2014. The increase in expenses is primarily attributable to an increase in litigation, patent amortization and contingent partner payments and contingent legal fees partially offset by a decrease in compensation and benefits and stock-based compensation.

Skippen also noted that WiLAN signed eight new licenses in the quarter including two wireless license renewals.

The company had cash and cash equivalents of $117.2 million, down from $126.3 million at the end of 2014.

The company also announced that it was suspending its revenue guidance because it believes such guidance can be misleading to investors.

"We've exceeded revenue guidance by an average of 20% every quarter," Skippen said on the call. "We believe it can be misleading and is not a service to investors."

He added that the the decision to suspend guidance "had nothing to do with revenue falling off. We have a strong backlog."

During the call Skippen also outlined a shift in WiLAN's acquisition strategy to focus on acquiring more than just patents.

"They're saying the patent market is more difficult and we're not going to be able to sign up big multi-year licensing agreements," said Todd Coupland, an analyst at CIBC Worldwide, who rates WiLAN a "sector underperform" and has a $3.50 price target.

"They're going to do more one-time deals that are smaller and less predictable," he said. "They're saying: 'while that's our new business model, we're also saying we may look at non-patent only acquisitions.' We may wake up some day and see an acquisition that's not patent related."

Coupland said he hasn't been recommending WiLAN for a while because of the "lack of visibility" in its revenue and earnings. "What's happening here is a confirming point."

WiLAN also said its has declared an eligible quarterly dividend of 5.25 Canadian cents per common share to be paid on July 3, 2015 to shareholders of record on June 12, 2015.

To reach the reporter responsible for this story please contact Dan Lonkevich at 707 318-7899 or at dan@thepatent investor.com