{"id":1303,"date":"2010-12-27T08:56:46","date_gmt":"2010-12-27T13:56:46","guid":{"rendered":"http:\/\/www.cusjc.ca\/ottawainsight\/?p=1303"},"modified":"2017-11-19T18:42:21","modified_gmt":"2017-11-19T23:42:21","slug":"patent-generator","status":"publish","type":"post","link":"http:\/\/www.cusjc.ca\/ottawainsight\/?p=1303","title":{"rendered":"Patent generator"},"content":{"rendered":"

The recent recession forced Canadian high-tech companies to prove they could survive. Some, like Nortel Networks Corp., failed. However, Ottawa-based technology-licensing company Wi-LAN Inc. emerged unscathed.<\/span><\/p>\n

\u201cOur business is largely recession proof,\u201d says Tyler Burns, director of investor relations and communications at Wi-LAN.<\/p>\n

\u201cPeople are always going to need laptops. They\u2019re always going to need phones.\u201d<\/p>\n

Wi-LAN president and CEO Jim Skippen agrees.<\/p>\n

\u201cIf you focus on Wi-LAN\u2019s cash revenues, we\u2019ve had at least 30 per cent growth every year since 2006. So if you look just at our top line, you wouldn\u2019t think Wi-LAN faced any recession at all, because we\u2019ve just seen very significant growth.\u201d<\/p>\n

Founded in 1992, Wi-LAN established itself as a high-speed wireless data and Internet communications provider, focusing on inventing and producing low-cost, high-speed wireless technology.<\/p>\n

However, the company fell into what Skippen describes as \u201crough shape\u201d in 2006, entering the year with a net loss of $25.8 million.<\/p>\n

\u201cChange was needed at Wi-LAN in order for it to compete in the marketplace,\u201d says Skippen.<\/p>\n

A NEW BUSINESS MODEL<\/span><\/strong><\/p>\n

Later that year Wi-LAN altered its business model to generate most of its revenue through developing and licensing intellectual property rather than through product manufacturing.<\/p>\n

This change was a shrewd move for Wi-LAN, explains Jason Donville, president and CEO of Donville Kent Asset Management Inc.<\/p>\n

\u201cWi-LAN has risen from the ashes of a company that was in pretty bad shape, so part of the reason why they\u2019ve been able to do so well is that they\u2019re coming from this adversity.\u201d<\/p>\n

The fact that we now have 106 companies sets a precedent that the industry sees our technology\u2019s value.<\/span><\/p>\n

Donville also explained that Wi-LAN timed the change fortuitously.<\/p>\n

\u201cThere\u2019s a certain part of the market that\u2019s opened up over the last ten years for these intellectual rights companies, and obviously there\u2019s been a good investor appetite, especially for where they\u2019ve been able to get their finances.\u201d<\/p>\n

Although Wi-LAN left manufacturing, it remains involved in many areas of the high-tech sector.<\/p>\n

The company has a portfolio of more than 970 patented inventions in wireless network devices, including technologies found in cellular phones, laptops, and televisions.<\/p>\n

Skippen says this diversity has benefited his company.<\/p>\n

\u201cI think we have a pretty valuable technology portfolio, and I think many companies understand that if they want to operate with freedom in some big wireless or TV markets, they need a license to our patents in order to operate.\u201d<\/p>\n

In early September, Wi-LAN signed its one-hundredth licensee of its technologies, which Skippen believes is a testament to what his company has to offer.<\/p>\n

\u201cThe fact that we now have 106 companies sets a precedent that the industry sees our technology\u2019s value.\u201d<\/p>\n

EARNINGS ON THE RISE<\/strong><\/p>\n

This growth has also been lucrative for Wi-LAN.<\/p>\n

For nine months ending Sept. 30, Wi-LAN earned $39.5 million \u2013 a significant increase from the $28.8 million earned in the same period last year. Skippen says he expects the total revenue for the year to be \u201cin the range of $46 to $48 million.\u201d<\/p>\n

Along with the financial results, Wi-LAN announced signing 27 additional licenses to date this year, three consecutive quarters of greater than 20 per cent revenue growth year over year, and the acquisition of 75 issued and pending patents.<\/p>\n

Burns defines this as a \u201cvery exciting time for Wi-LAN.\u201d<\/p>\n

Wi-LAN\u2019s recent growth has had a positive impact on its share price. The company\u2019s shares hit $5.15 in early November, a 39-month high for the Ottawa firm, and a far cry from the 60 cents a share its stock was worth in March 2006.<\/p>\n

\u201cIt\u2019s an acknowledgment by people in the financial community that the company is establishing value,\u201d says Burns. \u201cIt shows that with the activities that we have underway, especially in terms of our litigations, that they believe that there is value in the business and they\u2019re willing to pay for it.\u201d<\/p>\n

I hope all we\u2019ll have left is the rising revenues, with a lot less expense<\/span><\/p>\n

Donville agrees, saying it is no wonder investors have been drawn to Wi-LAN.<\/p>\n

\u201cThings seem to be going in their favour,\u201d says Donville. \u201cThere seems to be a lot of growth metrics that are in place, so now it\u2019s just a matter of executing their business plan and adding to their patent portfolio.\u201d<\/p>\n

\u201cThe outlook looks quite positive.\u201d<\/p>\n

However, it\u2019s not all good news. Wi-LAN\u2019s third quarter produced a loss of $6.2 million, largely due to increased litigation fees.<\/p>\n

Those higher-than-expected fees accounted for more than 41 per cent of the company\u2019s operating expenses in the quarter. Most are tied to patent infringement against many of the largest notebook makers, including Dell and Apple. Those trials are set to conclude in the early months of 2011.<\/p>\n

Skippen says that although Wi-LAN\u2019s litigation expenses are currently higher than he anticipated, he does not expect that to continue.<\/p>\n

\u201cI hope and believe it\u2019s temporary,\u201d says Skippen. \u201cIt\u2019s really like an investment, and when it goes away, I hope all we\u2019ll have left is the rising revenues, with a lot less expense.\u201d<\/p>\n

A PICOCELL FUTURE<\/strong><\/p>\n

Looking into the future, Skippen says he wants his company to maintain the same pace it has had since he joined in 2006.<\/p>\n

\u201cI\u2019ll be happy if the future of Wi-LAN looks like the last four years at Wi-LAN,\u201d says Skippen. \u201cIn other words, we just continue to increase revenues at a significant rate, and continue to build up our strength, both on the R&D front and on technology licensing.\u201d<\/p>\n

\u201cWe just have to continue to perform.\u201d<\/p>\n

The advantage of that is you can get much better (network) quality and you can handle more devices.<\/span><\/p>\n

Skippen is also looking toward two projects Wi-LAN is currently developing: enabling technology in white space, and picocells.<\/p>\n

\u201cWhite space is the spectrum that\u2019s been freed up because TV signals don\u2019t need to be broadcasted in an analog way. They can be broadcast digitally, so they take up a lot less room. It\u2019s a very good spectrum to broadcast wireless signals.\u201d<\/p>\n

Burns says the benefit of developing technology that can tap into this unused white space spectrum is that the network range increases significantly.<\/p>\n

The second of Wi-LAN\u2019s product developments are picocell technologies \u2013 base stations for cellular phones and other mobile devices that cover small areas roughly the size of a city block.<\/p>\n

\u201cThe advantage of that is you can get much better (network) quality and you can handle more devices,\u201d says Skippen.<\/p>\n

Burns agrees these developments represent the future of Wi-LAN.<\/p>\n

\u201cWe are developing some innovative technologies that we think are going to be important, which could generate hundreds of patents in the future, that we would then look to license to other companies,\u201d says Burns.<\/p>\n

\u201cIt should bear fruit in the future.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

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