Wi Lan's (WILN) CEO Jim Skippen on Q1 2016 Results - Earnings Call Transcript

| About: Wi-Lan Inc. (WILN)

Wi-Lan Inc. (NASDAQ:WILN)

Q1 2016 Earnings Conference Call

April 27, 2016 10:00 AM ET

Executives

Jim Skippen - President and Chief Executive Officer

Shaun McEwan - Chief Financial Officer

Analysts

Daniel Kim - Paradigm Capital

Todd Coupland - CIBC

Doug Taylor - Canaccord

Operator

Good morning. And welcome to WiLAN’s First Quarter Fiscal 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Earlier this morning, WiLAN issued a news release announcing its fiscal financial results for the first quarter ended March 31, 2016. This news release is available on WiLAN’s website and will be filed on SEDAR and EDGAR.

On this morning’s call, we have Jim Skippen, WiLAN’s President and Chief Executive Officer and Shaun McEwan, WiLAN’s Chief Financial Officer. Following prepared remarks by Mr. Skippen and Mr. McEwan, analysts will have an opportunity to ask questions. Certain matters discussed in today’s conference call or answers that maybe given to questions could constitute forward-looking statements. Actual results could differ materially from those anticipated. Risk factors that could affect results are detailed in the company’s annual information form and other public filings that are made available on SEDAR and EDGAR.

During this conference call, WiLAN will refer to EBITDA. EBITDA does not have any standardized meanings prescribed by U.S GAAP. EBITDA is defined in the company’s quarterly and annually filings that are made available on SEDAR and EDGAR. Please note that all financial information provided is in U.S dollars, unless otherwise specified.

I would now like to turn the meeting over to President and CEO, Jim Skippen. Please go ahead sir.

Jim Skippen

Good morning, everyone. And thank you for joining us on our Q1, 2016 conference call. A strong result in Q1 reflects our continued ability to sign licenses despite the current environment and our focus on closely managing expenses. A quick look at the numbers shows revenues up $30.2 million (press release $30.1), up 48% from last year. EBITDA of $19.8 million, up more than [34] from last year. Cash from operations up $14.8 million, up from $2.4 million last year and cash of $102 million on the balance sheet, up from $94.6 million at year end.

In Q1 we signed 11 new licenses. I'd like to look at the some of the highlights. We signed licenses with GlobalFoundries and TSMC, two of the world's leading foundries. Each company took licenses for some but not all of the patents in the Qimonda portfolio and Freescale portfolio acquired last year. Also of note for TSMC as part of the overall agreement we sold the 400 patents. These are patents are used in licensing now or expected to be used in licensing in a future so we don't consider them core patents. We also signed a license to Advance Microscopy portfolio in Q1. The license is with Thermo Fisher, a large American multinational. The Microscopy portfolio has been a real success for us and generated seven licenses in just a year's time after this portfolio was acquired. Two licenses were signed in the building are automation area or vertical. Several licenses were signed in Ag motor space and finally a wireless renewal agreement was signed.

Now few comments on our partner programs. The TSMC and GlobalFoundries licenses highlight early successes we are having with Qimonda and Freescale portfolios. All portfolios were acquired less than a year ago and are already delivering some pretty good results. Based on our success in signing industry leaders two agreements already on these portfolios, we are actively seeking license with other companies in the sector signed as well as many other sectors.

Also in the partner space we established a unique partnership with Dominion Harbor Bank which was announced in the quarter. Dominion Harbor is a patent bank setup and run by David Pridham who is well known in our industry. Dominion Harbor is accumulating patents to offer them to promising companies for share of the equity in the company. WiLAN is one of the first patent owners to seed the bank. We provided an approximately 100 patent families which we viewed as long quarter of business. Accordingly we will share the upside of any of the businesses that acquire patents as their equity increases. If their equity is not increased there will be no financial impact to WiLAN. This partnership reflects another potential source of dollar to earn and our ongoing commitment to seek up creative ways to monetize our patent portfolio.

Turning out to litigation. We currently have more than 60 ongoing litigations to the US. Beyond the US market, we are taking a closer look at other geographies for possible litigations. Those are that our primary focus are Canada, China and EU in particular Germany. Interestingly the EU is establishing a unified patent court. This means that a ruling in one court in Europe will apply to all the other European countries in which the patent had equivalents. Furthermore, it creates a single patent jurisdiction and collectible larger than the US. We continue to deploy our contingent litigation strategy in an effort to keep cost down and to align the interest of legal partners with our own.

Our ability to carry currently more than 60 litigations is a correct result of this cost saving strategy. This quarter the amounts spent on dividend was $1.1 million while the amount spent on buyback was US $2.3 million. The Board also declared a dividend of CDN $0.0125 per share.

In closing, again it is fair to say the Q1 is the strong start to the year and reflects the ongoing execution of our strategy and focus on expense management. We will continue to execute in that strategy. We've positive outlook and have strong pipeline and we do have a strong pipeline license opportunities within our growing partner programs to capitalize on. However, those who follow WiLAN know that while we would get the licenses to timely complete those licenses can vary from quarter-to-quarter. Over to you Shaun.

Shaun McEwan

Thanks, Jim. And good morning, everyone. As Jim already stated Q1 revenue is up 48% year-over-year, it ended $30.2 million (see press release $30.1) in the quarter. Revenue is driven by the 11 licenses signed during the quarter including the larger licenses for the Qimonda portfolio already headlined. Revenues for the 12 months ended March 31 were $112.6 million. Cost of revenue expenses were $18 million in Q1 down 8% from last year. Lower expenses reflect the decrease in litigation expense, offset in part by increases to patent maintenance fees, contingent litigation and amortization.

These trends reflect the shift in litigation expense to more of contingency in nature as Jim headlined. The extension of our partner program and the overall growth of our patent portfolio. Litigation expense was approximately $900,000 in Q1 down from $6.2 million in Q1 last year. Lower litigation expense reflects our goals to reach settlement without litigation and to form contingent fee arrangements with our old legal partners.

Our Q1 numbers compares favorably with our guidance which was for a range of $1.5 million to $2 million. As stated previously in 2016 we expect litigation expense to be lower in 2015 level as a result of our transition to contingent litigation strategy.

At maintenance, prosecution and evaluation expense was $3.1 million in Q1 compared to $1.3 million last year. This expense is proportional to the size of our overall portfolio which increases significantly during 2015. As a result, we would expect this expense to be higher in 2016. At the same time, as Jim already pointed out earlier, we are working to reduce the value not at the value patents in order to mitigate this increase.

Finally, contingent partner payments and legal fees were $1.9 million in Q1, up from $655,000 last year. These costs are directly related to the new agreement signed in a particular quarter. Increasingly more revenues are derived from our licensing program that contain contingent payment obligation. Therefore, we would expect this expense to track more closely to our revenues.

Marketing, general and administration expenses were $2.6 million compared to $2.3 million last year. This cost us some variation from period to period depending on the activities and initiatives undertaken at that time. As a result of strong revenue performance and keeping a close eye on expenses, EBITDA in Q1 was $19.8 million or $0.16 per share compared to $4.7 million or $0.04 per share last year. And on a trailing 12 months basis EBITDA was $69.8 million. To put on a perspective that's approximately $0.58 per share. This performance translated well at bottom line where we generated GAAP net income of $4.9 million, or $0.04 per share versus a net loss last year of $4.8 million, or $0.04.

Now I'd like to turn your attention to cash flow and balance sheet for a second. For Q1, we generated $14.8 million in cash from operations. We spent $4.4 million for pat acquisition that were made in previous period. And as already headlined we paid $1.1 million in dividend and $2.3 million in share buyback. This brings our total return to shareholders since implementation of our dividend to almost -- to just slightly over $119 million. We ended Q1 with cash and cash equivalent in short investment on our balance sheet of approximately $102 million, up from $94.6 million at December 31. This is another area where 2016 is off to a very good start.

Lastly, I'll discuss our guidance for second quarter of 2016. Cash operating expenses are expected to be in the range of $9.7 million to $11 million. Of which $1.6 million to $2.1 million is expected to be litigation expense. This guidance does not include any contingent payment that may arise as a result of incremental revenues worked in the quarter.

In closing as Jim stated we are all -- we are very pleased with our Q1 performance. I feel it's important to point out that our quarterly results can vary from period-to-period based on the license activity in the quarter. Over the long term we see the opportunity to grow the business and increase shareholder value by adding new partners, new portfolio of programs from those partnership and subsequently new license agreement. As these metrics continue to trend in the right direction so to with the growth of our business.

This concludes my review of the financial results. Now I'll turn the call back to the operator for questions.

Question-and-Answer Session

Operator

[Operator Instructions]

The first question comes from the line of Daniel Kim from Paradigm Capital. Your line is open.

Daniel Kim

Good morning. Thank you. Congrats on the quarter. Nice to see some great top line and bottom line contribution. My first question is on TSMC. Jim if we look at how things are played out with GlobalFoundries with a number of different patent families is asserted against that company. How should we think about TSMC? Is there potentially more to come with other patent families or is this won and done type of deal?

Jim Skippen

It really only is a deal for a limited number of patents. So it follows the character of -- that deals are typically following now. They are comprehensive licenses to all patents while they are known, and all the patents while they are only for a period of time in the future, they are license to very fixed number of patents that are identified. So if new patents are available to us either in our portfolio or because we make new acquisition, there is the potential from our license revenue and certainly both those licenses have that character.

Daniel Kim

Great. So if the Freescale -- I don’t believe that you contemplated the Freescale patent. Is that correct?

Jim Skippen

There is a limited time with some of the Freescale patents and it's -- it may have to do with licenses that were already granted to that portfolio but so at this point I think we think that it is unlikely that we be asserting the Freescale portfolio directly against TSMC. We probably be much more focused on asserting that against TSMC's customers and we are open to do that.

Daniel Kim

Okay. In the past when WiLAN targeted new vertical so to speak in when after certain players there was I think the strategy was to give better so called rate to early licensees. If we look at the remaining players then within the GlobalFoundries space of which there are significant players still remaining, given you have signed deals now with two very large players TSMC being the largest, could we expect then in terms of go forward business potentially for more favorable outcomes on a relative basis with the remaining litigants.

Jim Skippen

Yes. There are couple things. So let me try to state some of the principles to help answer your question. So I think we do still believe that an early licensee that pays a license without the need for any litigation should get a better deal. And you mentioned other litigants but the fact is that TSMC and GlobalFoundries they are not litigants. They are both companies that volunteer to take licenses without any need for litigation. So I do think that generally we subscribe to the view that if generally if we move to litigate or it takes longer that any discount offered to the first mover shouldn't be is available. So I think general that's true and how we are operate. And second thing that we now factor in and this is more looking at it from our own internal point of view is that our return on capital and/ or the benefit to WiLAN a very quick licenses, doesn't cost us much to achieve. We can get the same benefit with less money. And really it justifies I guess that approach. But both those dynamics are at play so I do think this is just one part the Qimonda portfolio and probably a lesser part to the Freescale portfolio but they are - they are just one component, there are many other components of the licensing. And I do expect additional foundries to sign and I do expect fortunately that they should pay a little bit more because they took longer and there maybe need to litigate.

Daniel Kim

Okay, very good. Next two questions I think might be better for Shaun. With regards to the breakout of COGS. If we look at specifically at patent maintenance versus contingent partner payment and compare those numbers to say Q4, those numbers seems to have split. I mean how given the deals that were signed in the quarter, does account for the difference or and/or the structure the deal signed? How should I think about those numbers on a go forward basis?

Shaun McEwan

Well pat maintenance fees is addressed by one first.

That's related to the size of the portfolio. It is kind of unrelated to the licenses or the value of licenses right. So as our portfolio grows, as we bring on more partnerships and more programs we may expect that number to increase. It will go down as we continue to streamline our portfolio ownership either through sales or through other Dominion Harbor type programs or right abandonment or donation to the public purse right. So that number as you see that our patent portfolio size increases, expected to increase, as we decrease the size of portfolio will decrease, it is less related to the sales. When you look at the contingent numbers, those are related to two things. Contingent litigation expense and contingent payment to partners. So that the partnership program when we have a portfolio that has a residual payment to the previous owner that would be cost by the --. Those items clearly are related to the licenses that are signed or perhaps collected in that particular quarter.

Daniel Kim

The question I have is I would have thought given the revenues and the number of deals announced at the contingent program payment would have been sequentially at least the same or slightly higher?

Shaun McEwan

Depends on the particulars of the deal. We have 54 different programs underway right now with 43 or 44 to the partners. Based on where we add in litigation and Jim already indicated both of the two big deals this quarter came without any litigation. So there is very little or no contingent litigation expense on those one. There may be partner point and obvious so it is not perfectly linear with revenue necessarily.

Daniel Kim

Right, right, okay. Great. Okay last question is on tax. I mean this is always tricky subject but given your significant tax pools what do you account the large provision for income tax within the quarter for?

Shaun McEwan

There is two components to the tax provision. There is the current amount which is little more than $3 million. That number is related to with holding taxes or it held in foreign source income. And if you think about our usual run rate kind of around 3% or 4% of revenue seems to be the number. This one is a little bit higher based on the geographies of where we achieve the revenues from. The deferred tax expense of another $1.8 million or so that's related to the fact that we are highly profitable this quarter. And most of that profit is in Canada. And our tax assets on our balance sheet are related to our Canadian tax assets. So as we are profitable in Canada we use up those assets. So if you look at the balance sheet it went down by the $1.8 million in terms of an asset. And the tax expense went through. The deferred tax is a non-cash item.

Daniel Kim

Okay, great. And could you have to guess what kind of normalized tax rate would be going forward?

Shaun McEwan

On the cash tax side it is probably more in line -- would expect with the previous quarters probably more around 5% to 6% kind of range. The deferred tax, it is very difficult to predict because it is related to which geography we generate the profit and but I would assume it's -- given it is non-cash it would be probably just not get too excited with forecasting at all.

Operator

The next question comes from the line of Todd Coupland from CIBC. Your line is open.

Todd Coupland

Good morning, everyone. I'll pass on congratulation as well, nice quarter. Could we talk about OpEx a little bit to start off? So the guide is a little bit higher than I would have expected. But judging by your last answer it doesn't sound like it is predict of higher revenue, it is just reflecting the higher patent maintenance expenses, is that the right way to think about that?

Shaun McEwan

And little bit more litigation expense when you look at our guidance in Q2; our litigation expense is little bit higher than $900,000 we experienced in Q1. Season announced patent not in our forecast right. So with revenue goes up dramatically and we have more contingent amounts payable. That will be an incremental expense but it will be directly related to the revenue.

Todd Coupland

Right. Okay. And this uptick in Q2 is it specific to Q2 or should we be thinking about OpEx now in roughly $10 million a quarter of range for the rest of the year?

Shaun McEwan

If you look back at our guide for Q1 it was pretty well in that range as well. So I think it's still fairly consistent. We just happen to execute little better on our cost control if you want.

Todd Coupland

Okay. Are you guys providing an update on roughly where the backlog is?

Jim Skippen

Yes. We didn't provide that. We did provide backlog in one or two of the last quarters. Although historically we have not provided backlog. I can confirm we still do have a sizeable backlog. I guess we believe that although we know some investors consider backlog helpful, it create some business challenges for us. Is giving backlog and reveal exactly how much the deal is worth and that can limit the amount of future deals, this is because licensees are often very sensible about not paying more than anyway else. So they think they reverse engineered exactly what a deal is worth. We have a real impediment getting in the paying more. So we feel it's despite the fact that some investors find it quite helpful, it may not be in a best interest with business to do it. I think through as a model changes we feel the backlog is going to be less important because of the number of licenses overall is increasing. We have 11 this quarter and we really not as relying on backlog. So our form of business model was really that we signed few licenses, it took licenses for the whole portfolio, they spread out the payments over a period and we got quarterly payment so knowing the backlog really help people understand the value of the business. More and more though party that taking licenses to 154 portfolios and they pay it all up front and we go back to them next quarter or next year or whatever and they sign a new license. So it is not -- it is a slightly different model. I think finally with some of the accounting changes too we understand we are not going to be able recognize, we are not going to be able to keep backlog when the accounting changes kind of you then have recognize it all once its revenue maybe Shaun you can elaborate on that.

Shaun McEwan

Yes. The under US GAAP in particular and IFRS is affected by it as well. There is a new rule coming in for revenue recognition effective December 31, 2017. So far 2018 fiscal the rules are pretty prescriptive in that what are our previous business would have been characterized as having backlog signed a deal for $10 million or $8 million a quarter over 10 quarters candidate. In that kind of circumstance the accounting rule previously allowed you to because of risk of concession recognized the revenue more in line with the cash. Now those rules are changed to say there is nothing else you have to do once you grant that license, you met all your obligations, there is no other promises and way over simplifying this but necessarily it is going to say even if you taken the revenue over 10 quarters or the cash over 10 quarters, you are really getting all that revenue brought up but and if it is long enough period you are going to have end up discounting the cash to figure which amount is an interest amount that's inherent in the financing that you are providing to that guy they take license. So the world of $100 million deals amortized over five years, Jim already said that's probably not the case on the go forward basis because we got 50 quarter from portfolio as everybody takes licenses differently now. But even if it were the case the odds are you are going to end up with a significant amount of that booked as revenue at the time of licensing.

Jim Skippen

I can make one final comment on this which is some of the deals signed in the quarter they did add to backlog, first in case and see we didn't get all the amounts this quarter but going forward we are not standing --- at least we are not intending to provide backlog every quarter. We may from time to time provide it but not every quarter.

Todd Coupland

Okay. That's fair. That's very helpful color. So I wanted to just ask about broadly speaking the Freescale and Qimonda patent families. So you signed a couple of high profile deals. Is there anyway to characterize what percentage of the opportunity you think you've recognized in these patents families? Is it like 10% of the opportunity or 50% of the opportunity? Like where are you in those programs?

Jim Skippen

So first of all with Freescale we really just at the very, very beginning. The truth is we didn't have GlobalFoundries in our plan at the time that we did the deal. So in a way that is down money. So we are just getting going on that. So I feel like the 5% of the opportunity have been -- or the mine has been mine so to speak. So there is still a tremendous amount to go. And then on Qimonda, you have to include Samsung in that. We've got Samsung GlobalFoundries and TSMC that are both signed up in last few years. I mean it's so far working up pretty well. And the gross revenue is certainly are making our purchase price look pretty good in terms of what we've already gotten. But I would say myself to tune of 25% range of what we expect the opportunity to generate, maybe better than, in other words maybe less than 25%.

Todd Coupland

And with the deals that you are seeing thus far is there any way to comment these deals coming in as you expected, better than you expected, not dollar amounts but qualitatively versus the opportunity you thought was there?

Jim Skippen

Well, I guess the way be very candid and sort of open the Qimonda on this a bit, I think both owner merits are a little bit less than have in our plan but both our match were achieved. I am talking about TSMC and GlobalFoundries. Both of them were achieved much more perfect with much less expense, so the bottom line to us is much better than was in the plan. So we are more and more as we model the stuff we are realizing that we are actually better off to realize revenues quicker with little expense than dragging it out and having a cost a lot more to so we are quite happy with how it has fallen.

Todd Coupland

Okay. Last question. You referenced Wireless renewal, how much of Intel is that in terms of being able to rein in the rest of the renewals you are going to deal with later this year? How significant is that?

Jim Skippen

I think there is a little better shift with some of the big companies. There are bit quite a few changes. Some companies have been acquired by others so that world changed to that. But using some examples companies like Intel or Broadcom for instance took import licenses and they were licensed up until the end of 2016 and in Broadcom case it little bit past that and we think we've got lots of stuff that's going to motivate those companies for instance to re-up their license. But it may not be exact same mix of technologies that cost them to take the initial licenses. And specifically what I am talking about is our strength in Wi-Fi that we had back not 10 years ago and we are not stronger in Wi-Fi now. We do at some Wi-Fi technologies but not -- we don't have a fund to fund some of the very basic fundamentals patents on Wi-Fi or they have expired. What we do have though is we have for instance all the 30 pat families that read on LTE in handset. And we also have our many; many are the semiconductor technologies that we didn't have before. And so I think these companies are going to renew licenses or take new licenses but and we think the dollar amounts would be significant. But it will be for a different mix of technologies than it was in the past.

Todd Coupland

Okay. No, that makes sense Jim. Sorry last question if I could. Just on EBITDA. So you talked about a goal of roughly holding EBITDA flat in 2016, pretty good start to the year. Could you give an update on your views on that? Thanks a lot.

Jim Skippen

Sorry is the question is on -- are you saying --

Todd Coupland

I saw you in the past you made commentary that you hoped EBITDA could be held in the $50 million range for 2016. I just wanted; you had a good start to the year with Q1. Just wondering if you update your opinion on that? Thanks.

Jim Skippen

Well, obviously, okay this is -- I think you are asking

I'd say a little of different question which is, should we expect $20 million of EBITDA every quarter. Because if we did we got that obviously we'd be at $80 million and that's a lot better than $50 million. And this is what I would say about that. I think the last two quarters have been positive surprises and that's what happens in our business because there is a lumpy nature to it. And that lumpiness is increasing given the nature of -- the way we signed licenses now. We certainly have more than enough ammunition to continue like we have in Q1 and continue this trend. We could get next quarter could be to be very similar to this quarter. But it might not be as well. It depends on the timing of signing. So at this point I don't know I think that to be conservative I would not want to give sort of that $50 million-ish number but it could be much better. We will have to see and I'd rather wait until I can be sure than predict to get it wrong. Is that helps?

Todd Coupland

It does helps. Thanks a lot. Appreciate it Jim.

Operator

[Operator Instructions]

The next question comes from the line of Doug Taylor from Canaccord Genuity. Your line is open.

Doug Taylor

Thanks. Good morning. Maybe I'll just ask -- you've decided not to provide the backlog number this quarter and the reasons you've given are strong. Maybe it would help us to maybe understand a bit even in rough terms what proportion of your revenue at this juncture is coming from the multiyear patent licensing, recurring license fees as opposed to kind of one time hit that you recognized in the quarter which obviously drove a lot of upside this quarter?

Shaun McEwan

Yes. Doug, it's pretty good shot -- but we never going to give any further color on that than we've already provided for exact reasons Jim has highlighted. If we get too granular, we start giving away value of license agreement perhaps even signed in a quarter. Then we could end up in difficulty with guys that signed a license agreement for indirectly disclosing the guy to their license, we are really working hard to stay away from that. We are looking at the performance of the business.

Doug Taylor

That's fair enough.

Shaun McEwan

We want to look at three metrics in the business really. It's the portfolios that we bring in. The partnership that we signed up in terms of quality individuals, add number count and ultimately the license are resigned. So that's where we really want focus to be.

Doug Taylor

All right. That's fair enough. I thought I would ask. In light of some of the -- you guys have seen some opportunistic bidding for a companies like Kesha you sold some patent portfolio I guess I'll ask if you've seen more broadly a little more interest in patents overall and how the valuation of patents has evolved in the last couple of quarters, if that’s match some of the revenue upside that you are seeing?

Jim Skippen

Well, it's a tough question. I mean I don't think that offer for Kesha went anywhere. I know it was a pretty opportunistic offer myself. I haven't seen any change to be honest. I think that the patent market is still pretty depressed. Whether it is got as always it can get I am not sure. But it is creating opportunities for us as we are seeing more and more great portfolios that we wouldn't have seen on very reasonable terms. And these works and things we would never seen five or six years ago. But I can't say, I don't see the evidence yet that sort of as a rebound in the market. I'll certainly tell you if I think there is a rebound in the market. But I don't see it yet. And the truth is when I talk to other CEOs and our types of company I mean we are kind of we are unique and that we got uniquely good performance. Most of our brothers are just struggling a lot more than we are. And we hope it is because we are executing well, doing the right thing and maybe little bit of luck and we hope to continue but I think next steps to see that.

Doug Taylor

So still a very much a buyers market in terms of patents valuations. Can you talk a bit about your pipeline of opportunities either for acquisitions or partnership which is a model you are favoring these days on that side as opposed to the licensing opportunity which you said the pipeline is strong?

Jim Skippen

Yes. I mean we do have a number of acquisitions opportunities we are looking at. And really when I say acquisition or partnership I am probably talking about the same thing. Because we are pretty firm in our belief that what we should be doing is taking on patents without winning very much money or no money upfront. And then sharing in the proceeds with the patent seller. And it really --when we don't do that I know we had two big examples where we didn't do that with Qimonda particular and to some extent Freescale but it really is our typical model that we are not putting very much money at all upfront. We find that when were in the market and we can offer say $100,000 or $200,000 as an advance on our partner share of royalty. That's a huge differentiator for us in the marketplace because most other companies that are trying to take on the path as a monetize them are reluctant to deploy that much capital. I know it seems like a small amount but it seems to make a difference for us. So we have a number of opportunities. I have been looking at some of them very, very interesting, very exciting in terms of new acquisition that we are hoping and not really close I mean in not too distant future. So I am hopeful of what has to pretty excitement news on the acquisition/partnership front. On the licensing front and people are -- we've been all kinds of activity going on, all kinds of negotiations ongoing, our licenses we are hopeful that we are able to transact and reach agreement and keep the party going so to speak. That we have the last couple of quarters in terms of strong financial performance and lot of contribution is coming from Qimonda, Freescale but many of other portfolios as well.

Doug Taylor

Okay. May be the last line of question for me. If we set back a bit a couple of quarters ago a large restructuring and dividend with the Q3 results, seemed to be in response to a lot of uncertainty in the outlook. Now clearly the results are picked up since then. So I mean you said it is come little quicker than expected. If you had known what you would do now than would you have made the same cuts or to the same degree that you did. I just thought it's -- you are there and I would be interested to hear your view on that.

Jim Skippen

Well, I've already said that's why what we did. I mean I think we are putting out dividend of $26 million a year, I think that was too high for our company and when we develop that strategy, we had different outlook on what would the business is going to do. And I am very confident where we are today. And I think it's going to workout well and I like the fact that we have more capital to deploy and to growing the business and we still have a dividend and we are very committed to that. And we will -- we are fairly aggressive at least comparatively speaking with the past in terms of using a buyback and we won't hesitate to use that again. But being committed to a very, very large dividend I think for a small company like us our market was in a lot of great long- term strategy and I am quite happy that we got through that. I am glad we seemed to be emerged from that without too much undo damage. So I am -- and believe me I hope that we workout this way when we made those changes. We purposely try to make those changes at position where we didn’t think we were extremely weak. Because so many companies wait too long to make changes. And they don't do them from position of strength in my opinion. They do them from position of weakness. And in the end I think it hurts them. So we did it from a position of strength. I think it's worked out okay. And I don't regret it at all.

Operator

There are no further audio questions at this time. I'll turn the call back over to Mr. Skippen for closing remarks.

Jim Skippen

Thank you very much for attending our call today. Please feel welcome to reach out to us if you have any questions. And we look forward to reporting to you in the coming quarters. And thank you again for your time. Bye.

Operator

This concludes today's conference call. You may now disconnect.

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