TSRA, UEPS, etc.

Well that was a fun day -- NOT! TSRA -- one of my largest individual holdings down 34% is not what I expected this week during the ITC trial -- now we know why the defendants didn't settle -- I suspect that QCOM had something to do with this timing and the ability to get the ITC to rule in their favor against TSRA.

The next step is an appeal that will be decided in 35 days -- if they lose that, then it might take 2-3 years for this to be resolved. We still have the Amkor arbitration that could add significant amounts of revenue and help the stock recover. The appeal could certainly turn this situation around but I wouldn't want to bet on it -- well anymore than I already have.

As far as the PTO goes -- think of this as similar to the prosecution having its say but the defense not getting to tell its side of the story -- yet. TSRA has not responded to their rejection comments yet so its hard to say how many will stay rejected during the full process.

keep in mind that 70 different companies have sicked their lawyers on TSRA and all have eventually paid. hard to believe that even QCOM's vaunted lawyers (who have lost to Broadcom by the way) are going to win in the end. this is just a delaying tactic.

I saw a few valuation exercises that suggest low to mid 20's based on the earnings from their existing business -- it is true that if their patents are invalidated that their current customers will seek to stop paying them even though their contracts are all for over 1000 patents most of which are not tied to those the PTO office is reviewing. Still valuation wise we now have some pretty good support.

for me -- no change in shares -- still have never sold a share since I bought in 2004 -- not necessarily the best idea given the volatility but it is what it is.

UEPS -- Morgan Stanely assumes 15 cents of earnings power from the new Iraq contract once it is fully up to speed. For about 4 mill potential new cards to only get a 15 cent jump in earnings doesn't seem right. I wonder just how profitable is the current south african contract, which is supplying the company with roughly 1.00 to 1.30 or so in EPS on a similar 4 million in cards. Now south africa has been up and running the longest but still -- I wonder if the risk isn't much bigger than previously thought -- perhaps they cut pricing on the contract to half what UEPS is getting now. That would still be a decent business for UEPS but the EPS potential would be a lot less. Now they would likely also get more subscribers but at less profit per sub that's not a good trade.