Hynix Semiconductor Inc., one of the world's other top four manufacturers of dynamic random access memory (DRAM) chips, has agreed to a six-year licensing deal with Mosaid to settle the litigation procedures that Mosaid had launched only last month.
The deal with Hynix follows a similar five-year deal struck with Samsung earlier in January to settle a patent case that was headed for trial on Feb. 1.
Samsung was Mosaid's first victory in its efforts to win licensing agreements from the world's top four DRAM chip makers. Mosaid alleges that a host of companies that make DRAM chips are in some way infringing on its own DRAM patents. Another case is ongoing against another of the top four, Infineon Technologies of Germany.
Eager to capitalize on its success against Samsung, Mosaid on Jan. 19 initiated litigation against Hynix and two of its U.S.-based affiliates for infringement of six of Mosaid's U.S. patents.
Under the terms of the deal, Hynix will make fixed payments over the six-year term of the licence.
However, as was the case with the Samsung deal, specific financial terms were not disclosed.
Analysts have for months been speculating about the domino effect of Mosaid securing a deal with Samsung. Estimates have suggested Mosaid's revenues could quickly triple or even quadruple. With the market hyped by such analyst reports, the lack of financial detail provided by Mosaid last month on the Samsung deal was not well received by investors and the stock suffered big losses.
Now that the company has secured another major licensing deal, but again declined to provide financial details, it will be interesting to see how investors react during Friday's trading session.
The Hynix announcement came only minutes before Mosaid announced third-quarter results for its fiscal 2005 that were boosted by a one-time gain from the Samsung settlement. Again, ahead of a 5 p.m. conference call, no financial details were provided on the payment plan Samsung has agreed to with its five-year licensing agreement.
However, the company did say the Samsung deal led to a one-time income tax recovery of $28.3 million for the third quarter.
FULL-YEAR GUIDANCE RAISED
For the quarter, Mosaid reported net earnings, including the one-time adjustment, of $34.12 million, or $2.96 per diluted share, compared with net earnings of $320,000, or three cents a diluted share, a year ago.
The result was on target with the updated guidance Mosaid provided last month.
Without the one-time tax recovery amount, net earnings and earnings before discontinued operations were $5.7 million, or 50 cents a diluted share for the quarter, still far better than the guidance from before the Samsung settlement for a net loss of $5 million to $6 million.
Revenues for quarter were $16.9 million, compared with $7.4 million a year ago. That is at the high end of the guidance provided last month.
For the fourth quarter, revenue projections have been boosted to $15.5 million to $16 million with net earnings of $4.5 million to $5 million.
The stronger outlook for Q4 has pushed revenue expectations for the fiscal year $48.7 million to $49.2 million and net earnings to $37.5 to $38 million. Last month, Mosaid forecast full-year revenues of $44.5 million to $45 million versus previous guidance of $30 million to 32 million.
'CHANGED AS A COMPANY'
"These licenses have changed Mosaid as a company," CEO George Cwynar said in a statement Thursday afternoon.
"Samsung and Hynix have agreed to five and six-year license terms, respectively, permitting their renewal at the end of the term and an opportunity to negotiate new licenses for their ongoing sale of semiconductors.
"Payments under these licenses are spread over the term of the licenses, resulting in a strong base of revenues to support the pursuit of additional patent licensees and the future growth of Mosaid.
"We also saw a resurgence in tester bookings in our systems business during the quarter. The resulting backlog will support solid systems financial performance into the new fiscal year.
However, we remain cautious about tester sales in the latter part of our next fiscal year as industry analysts are still anticipating minimal growth in DRAM revenues in 2005, a decline in 2006 and constrained capital expenditures throughout, " Mr. Cwynar said.
