Public IP company stalwart, InterDigital, with PIPCO-leading performance over the past five years, was hit by a significant drop in its net earnings in the 3Q. Its performance was in stark contrast to the oft-beleaguered Acacia, which posted a quarterly net profit of $158.4 million.
For Acacia Research Corporation (ACTG), the motivation was a one-time gain as a result of an unrealized return on its investment in Veritone Inc. (VERI), the artificial intelligence company that went public earlier this year.
InterDigital (IDCC) posted a 66% drop in 3Q net, as its income from patent royalties fell to $34.7M from $103.5M. “The decline in patent licensing was mainly because of a plunge in past patent royalties,” reported The Patent Investor.
Earning for PA-based IDCC actually came in better than expected. CEO Bill Merritt emphasized the company’s continued efforts to manage for the long-term, saying “the strong visibility over our revenues and future cash flows, given our high fixed-fee revenue contribution and long-term agreements, put us once again in a position to return value to shareholders with last month’s announcement of our third dividend increase in the past four years.”
Four Million Shares
Acacia’s $50 million in loans to Veritone converted in the AI firm’s May 2017 IPO into 4.12 million shares of Veritone. That included 1,969,186 shares and a warrant to acquire 2,150,335 shares that converted into stock with the IPO. Acacia also has 1,120,432 Veritone stock purchase warrants with a strike price of $13.26. The company said its cash and short-term investments totaled $158.6 million, as of September 30, 2017.
Acacia appears to have generated a better return from its well-placed loan than it has from its recent patent licensing initiatives. That may be its smartest patent monetization play yet. InterDigital is down approximately $15 per share YTD; Acacia about $.50.
For a performance comparison of InterDigital, Acacia and other PIPCOs, visit the IP CloseUp 30™, here.
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