August 10, 2010 / 11:05 AM / 8 years ago

UPDATE 2-Wi-Lan Q2 loss widens; sees higher litigation expenses

* Q2 loss of C$0.06 vs C$0.01 yr ago

* Q2 litigation expenses up 69 pct

* Rev up 23 pct

* Maintains 2010 outlook

* Shares fall 7 pct (Recasts; Adds conference call details, analyst comments, updates share movement)

Aug 10 (Reuters) - Technology licensing firm Wi-Lan Inc WIN.TO reported a wider quarterly net loss due mainly to higher expenses, and said it sees higher-than-expected litigation expense, sending its shares down as much as 7 percent.

“As the fiscal year progresses, we find ourselves involved in somewhat more litigation than we originally anticipated,” Chief Executive Jim Skippen said on a conference call.

Litigation costs accounted for about 33 percent of the company’s total operating expenses in 2009.

Wi-Lan, which develops and licenses intellectual property for products in the communications and consumer electronics markets, has been involved in litigations with Intel (INTC.O), LG Electronics (066570.KS) and Broadcom Corp BRCM.O.

However, the rise in litigation expenses will be temporary as wireless trials draw to a close, according to analyst Sean Peasgood of Wellington West Capital Markets.

“If the company does sign large licences and benefits from higher revenue, and then as litigation expenses fall away in the beginning of next year, Wi-Lan should benefit from operating leverage, which I think will be positive for the stock,” said Peasgood, who rates the stock a “strong buy.”

The company said the case that is scheduled for trial in Texas in January concerns four patents and five technologies — CDMA, WiFi, DSL, Wi-Max and Bluetooth.

Wi-Lan, which settled a lawsuit with Canada’s No. 2 phone company Telus Corp (T.TO) in April, still sees 2010 proforma earnings of C$8-C$11 million, on revenue of C$43.0-C$47.0 million.

“We believe the guidance is conservative, given the fact that the company cannot try to project the timing of when licences will be signed,” Peasgood said.


For the second quarter ended June 30, the company posted net loss of C$5.9 million ($5.75 million), or 6 Canadian cents a share, compared with net loss of C$1.3 million, or 1 Canadian cent a share, a year ago.

On a proforma basis, it earned 1 Canadian cent a share.

Analysts on average were expecting earnings of 1 Canadian cent a share, according to Thomson Reuters I/B/E/S.

Wi-Lan reported 23 percent rise in revenue to C$11.8 million, topping analysts’ average expectation of C$10.4 million. The second-quarter revenue included C$10.5 million in royalties.

Litigation expenses jumped 69 percent to C$6.8 million in the latest quarter, while total operating expenses rose 46 percent to C$16.9 million. Shares of Wi-Lan were down 16 Canadian cents at C$3.39 Tuesday afternoon on the Toronto Stock Exchange. They earlier touched a low of C$3.30. ($1=1.027 Canadian Dollar) (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Maju Samuel, Roshni Menon)

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