Immersion Corp (IMMR) 2016 Q2 法說會逐字稿

Good day and welcome to the Immersion Corporation second-quarter 2016 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jennifer Jarman. Please go ahead, ma'am.

Thank you, Rochelle. Good afternoon and thank you for joining us today on Immersion's second-quarter 2016 conference call. This call is also being broadcast live over the Web and can be accessed from the investor relations section of the Company's website at www.Immersion.com. With me on today's call is Vic Viegas, President and CEO and Interim CFO.

During this call, we may make forward-looking statements which may include projected financial results or operating metrics, business strategies, litigation, anticipated future products, anticipated market demand or opportunities, and other forward-looking topics. These statements are subject to risks, uncertainties, and assumptions. Accordingly, actual results could differ materially. For a listing of the risks that could cause this, please see our Form 10-Q filed with the SEC, as well as the factors identified in the press release we issued today after market close.

Additionally, please note that during this call we may discuss non-GAAP financial measures. For each non-GAAP financial measure discussed, a presentation of the most directly comparable GAAP financial measure and a reconciliation of the differences between the non-GAAP financial measure discussed and the most directly comparable GAAP financial metric is available in today's press release.

With that said, I will turn the call over to Chief Executive Officer Vic Viegas. Vic?

Thanks, Jennifer, and thanks, everyone, for joining us this afternoon.

Second-quarter results were mixed as we continued to see positive momentum in our business and our IP enforcement actions, tempered by certain OEMs who were either delayed in their reporting obligations or are taking more time to acknowledge the applicability of our intellectual property. We are in a good position with new products entering the market, new customer wins, validation of our solutions that will broaden our footprint in the advertising ecosystem, and significant proof points indicating the strength of our intellectual property portfolio. We continue to execute on our long-term plan to bring HAPTIX to the market and monetize through our solutions and IP offerings. I will provide a more detailed update on our business in a few minutes, but first I will review our second-quarter 2016 results.

Revenue for the June quarter were $7.9 million, down 52% from revenues of $16.2 million in the year-ago period, reflecting the absence of revenue from Samsung and other OEMs who were either delayed in their reporting obligations or are taking more time to acknowledge the applicability of our IP. Revenues from royalties and licenses of $7.6 million were down 52% from royalty and license revenues of $15.9 million in the second quarter of 2015. Of these amounts in the second quarter of 2016, variable royalties based on shipping volumes and per-unit prices totaled $5.6 million and fixed payment license fees totaled $2.0 million. This compares to variable royalties of $6.3 million and fixed license fees of $9.6 million in the prior-year period.

While revenue mix per line of business is expected to fluctuate on a quarterly basis, due to seasonality patterns, for the second quarter of 2016 a breakdown by line of business as a percentage of total revenues was as follows -- 38% from mobility, 37% from gaming, 13% from auto, and 12% from medical.

Looking at year-over-year trends, mobility revenues were down 74% from the second quarter of 2015, principally due to the nonrenewal of our Samsung contract, a nonrecurring license fee of $2 million from a completed contract in the prior-year quarter, and, to a lesser extent, decreased sales volumes from within our OEM customer base. Automotive revenues were down 18%, primarily due to the timing of reporting by our customers in 2015, partially offset by increased volume of vehicles sold. Medical revenues were up 46%, primarily due to the timing of royalty reporting by certain customers during the year. Gaming revenues were also up 4%.

Gross profit was $7.8 million, or 99% of revenues, compared to gross profit of $16.1 million in the second quarter of 2015.

Turning now to our operating expenses, excluding cost of revenues total GAAP operating expenses were $17.4 million in the second quarter of 2016, compared to $13.9 million in the year-ago period, with a significant contributing portion of the increase driven by higher legal expense, primarily related to our recent litigation filings against Apple and various other legal matters.

Operating expenses in the second quarter of 2016 included non-cash charges related to depreciation and amortization of $226,000 and stock-based compensation of $1.3 million. Of the non-cash charges, $393,000 were included in sales and marketing, $357,000 in research and development, and $730,000 in G&A expense. And of the stock-based compensation charges, $332,000 were included in sales and marketing, $258,000 in R&D, and $665,000 in G&A.

Looking now at our net results, net loss for the second quarter of 2016 was $5.6 million, or $0.20 per basic and diluted share, compared to net income of $1.6 million, or $0.06 per basic and diluted share, in the second quarter of 2015. Net loss for the second quarter of 2016 includes a tax benefit of $3.3 million that includes certain non-cash tax benefits and expenses associated with our international tax structure.

In addition to normal GAAP metrics, we use non-GAAP net income or loss and non-GAAP earnings or loss per share to track our business performance. We define non-GAAP net income or loss as GAAP net income or loss adjusted to reflect an expected long-term effective tax rate of 19%, less stock-based compensation. We define non-GAAP earnings or loss per share as non-GAAP net income or loss per share.

Non-GAAP net loss in the June 2016 quarter was $5.8 million, or $0.20 per basic and diluted share, compared to non-GAAP net income of $3.1 million, or $0.11 per diluted share, in the same period last year.

Although linearity of our quarterly results is being impacted by the timing of certain transactions and both the delay in reporting and acknowledgment of the applicability of our intellectual property by certain customers, at this time, we are making no changes to our financial guidance, which calls for 2016 revenues to be in the range of $55 million to $65 million, generating bottom-line results between a net loss of $11 million and net income of $400,000 and between a non-GAAP net loss of $8 million and non-GAAP net income of $3 million.

Our cash portfolio, including cash and short-term investments, was $56.3 million as of June 30, 2016, down from $64.9 million exiting 2015. The decrease was driven primarily by cash used for operations. During the June quarter, we did not buy back stock under our authorized stock repurchase program. We will continue to monitor our cash balance and stock price, as well as market conditions and strategic factors, as we consider any future buyback activity.

Turning now to the business, we continued to execute on our strategy to provide immersive haptic experiences to a wide and varied customer base. This includes both licensing solutions that deliver haptic value and licensing IP that can be the foundation for customers to deliver their own innovative haptic solutions, thereby creating an ecosystem of content creation, distribution, and playback.

In the second quarter, we saw significant design wins in our OEM business, made important inroads in the mobile content business, and have seen a significant spike in customer interest and media coverage for our innovative technology. At the same time, we have continue to aggressively pursue those companies who are using our intellectual property without properly compensating us.

This quarter, we signed a multi-year agreement with Lenovo for use of our TouchSense technology in their Windows and Android smartphones and tablets, enabling them to deliver higher quality and more competitive products to the market. Also this quarter, we signed a multi-year license agreement with Alps Electric for IP and consultation services to implement HAPTIX in their new touchpad product modules, which help PC OEMs design thinner, quieter, and higher-quality notebook PCs.

And we announced an agreement with CRI Middleware, a leading provider of audio and video solutions for the gaming industry, to enable HAPTIX on their CRIWARE platform. With over 3,000 game titles shipped, their new CRI HAPTIX tool will make it easier for mobile game developers to incorporate HAPTIX in their Android mobile games.

We are also excited about the momentum we are seeing in our content business, specifically in advertising. A team from Immersion recently attended the Cannes Lions International Festival of Creativity, where, partnering with Festival organizers, they designed HAPTIX in over 40 of the mobile ads that were contenders for the prestigious Cannes Lions awards. This on-site demonstration of the power of HAPTIX in advertising provided Immersion with over 350 contacts from major global creative, media, and production agencies who are excited about the impact HAPTIX can have on their work.

But the impact HAPTIX can have on advertisers, the clients of these agencies, is something they find even more compelling. Recent studies show that adding HAPTIX to mobile advertising improves key performance metrics and overall brand sentiment. As an example, the click-through rates for one advertiser was 220% above industry norms for one of its haptified mobile ads. This demonstrates increased engagement with the content and results in a reduction in the overall cost of the campaign.

For the same ad campaign, results show a 65% increase in the likelihood to recommend the brand and a 100% increase in interest for the product when users engage with haptified content. The same advertiser also saw a 100% increase in positive brand sentiment. These are metrics that advertisers care about and agencies are measured against.

During the show, we preannounced our new offering, TouchSense Design Cloud, which is the first creative tool for HAPTIX in mobile video. This design toolkit will enable designers and editors to create tactile effects in their video projects and provides a cloud platform for designing, editing, iterating, and sharing these projects across their ecosystem. The ability to design visual, sound, and touch together is a compelling value proposition, and we are working with a number of advertising professionals in our beta program in anticipation of our product release in the fall.

We continue to see momentum in the strength and growth of our patent portfolio. In April, we received a district court order confirming the arbitration award we received against Sony, which concluded that Sony's controllers sold in Japan infringed one of our Japanese patents.

In June, the United States Court of Appeals for the Federal Circuit issued a unanimous ruling reversing a decision by the District Court for the District of Delaware invalidating three of Immersion's basic HAPTIX patents in our lawsuit against HTC, thereby returning three battle-tested basic HAPTIX patents to the portfolio.

Shortly thereafter, we resolved our dispute with Samsung relating to tail rights under the agreement that expired at the end of 2015, and for a payment of $19 million, we have granted them product lifecycle wind-down rights for products that were licensed under our prior agreement with them. We have already received the $19 million payment and will recognize it as revenue in the third quarter. In addition, we agreed to a litigation standstill for a period of time.

As of June 30, 2016, we had over 2,200 issued or pending patents in the US, China, and other countries.

And now for an update on our Apple litigation. In May, we filed a second action in the ITC against Apple, AT&T, and AT&T Mobility, alleging that the Apple iPhone 6X, Apple iPhone 6X Plus, the MacBook, and the MacBook Pro with retina display infringed certain Immersion patents, including patents covering pressure-related HAPTIX. We also filed a corresponding patent infringement complaint in the US District Court for the District of Delaware, which has been stayed pending the outcome of the ITC action.

The ITC instituted the second investigation on June 6, 2016, and consolidated the first and second actions into one, revising the schedule to accommodate the second case. Under the new schedule, our claim construction hearing will be held on October 18, 2016. Our hearing before the ITC will be held April 27, 2017, to May 5, 2017. The initial determination date will now be August 11, 2017, and the target date for completion of the investigation will now be December 11, 2017. We continue to believe that the merits of both of our cases are strong and substantial.

On a related matter, on March 29, 2016, a petition for inter parties review, or IPR, challenging the validity of one of the patents asserted in our first action against Apple and AT&T Mobility was filed with the patent, trial, and appeals board, or PTAB, at the US PTO by an individual unrelated to either Apple or AT&T. The PTAB will decide whether to institute the IPR no later than October 5, 2016. We plan to vigorously defend the validity of our patent.

In addition, Apple also filed IPRs challenging the validity of the three patents included in the initial action we filed against Apple and AT&T Mobility on July 7 and 8. The PTAB will decide whether to institute the IPRs no later than January 13, 2017.

We continue to invest in our employee base and are bringing specialized skill sets into our organization to ensure the long-term success of our business model. Of particular note is the hiring of a new Vice President of Intellectual Property, Licensing and Business Development, who will focus his energies on monetizing our IP and developing standalone intellectual property offerings and pricing, which will help us identify and capture new licensing opportunities.

And we are in the final stages of selecting our new CFO, with several strong candidates under consideration, and expect to have someone on board by the end of Q3.

Finally, I am pleased to announce that we have added Sharon Holt as a new Board member. Sharon currently acts as an advisor for a number of companies, including Analogix Semiconductor, and comes to us with a wealth of experience with IP and solutions licensing from her days at Rambus, where she was the Senior Vice President and General Manager of the semiconductor business group, and at Agilent Technologies, where she served as Vice President and General Manager. Sharon's experience will be instrumental in advising us on monetizing both our IP and solutions from an operational standpoint.

In closing, we have had some great wins, but also focused strongly on protecting our IP, which can cause some unpredictability in the business, as was evident this quarter. However, we feel confident that, with this focus and patience, more customers will recognize and compensate us for the innovations we bring to the market. We see new business opportunities in every segment we serve and we will continue to innovate and bring solutions to market that will appeal to an ever-widening customer base. We will aggressively pursue patent protection, while working with partners to expand their use of and success with our technology. We have a sound strategy and a great team, and together we anticipate a successful remainder of the year.

Lastly, I look forward to seeing some of you this quarter at the Canaccord Genuity conference in Boston on August 10 and the Dougherty conference on September 28 in Minneapolis.

We will now open up the call to your -- open up this call to your questions. Rochelle?

Thank you. (Operator Instructions). Charlie Anderson, Dougherty & Company.

Yes, thanks for taking my questions. Hi, Vic. (multiple speakers). On the guidance (technical difficulty) there are a lot of moving parts there, right? You have added the $19 million from Samsung. I imagine that replaces some earlier number. And then, you are talking about this kind of delays and then lack of acknowledgment of IP.

So I wonder if you could talk about how much was gained by Samsung in the guidance and how much was lost by some of these issues you are referring to so we just think about the pluses and minuses here?

Sure. So the Samsung wind-down rights agreement generated $19 million. And as I said, it will be recognized in full in the third quarter.

When you take in consideration the $19 million plus the rest of our business, Q3 and Q4, I believe that that still is consistent with the guidance of $55 million to $65 million in revenue. So there was, as I mentioned in the call, there was one mobile OEM report that was delayed. We have now received that. There's a number of other negotiations that were originally contemplated as part of that guidance that right now are at risk. We continue to work hard to try to bring those to closure, but it is a combination of the upside of Samsung's wind-down rights, as well as some of the risks associated with the late reporting and negotiating new licensing agreements that leads you back to the $55 million to $65 million guidance.

Could you maybe speak to the driver -- because it does sound like it's multiple customers -- the driver of why there is a lack of acknowledgment of IP and what your remedies are?

Well, obviously, there's great adoption of HAPTIX in the market in all of the markets that we serve, so we are pleased to see that.

In many cases, customers are coming up with their own solutions. We engage them many times, put together claims charts and other evidence as to the strength of our IP, and those conversations are still taking time, even though we are giving considerable evidence. I can't tell you if it is a result of our current activities with Apple and others feel that they will let Apple do the heavy lifting.

But in any case, we are taking all the appropriate actions that we think are necessary to enforce our IP. And obviously during the quarter, we did license a number of new OEMs and there are many more ahead of us that we think we can license as well. But at this stage, there are a few that are a little slower than what I had anticipated at the beginning of the year.

Okay. Just two more quick for me. One is, could you update us on any conversations with Samsung around a longer-term license? We got the wind-down rights, but in terms of pursuing something longer term, just any updated thoughts there?

And then, secondly, you got this cash in the quarter. You have a better balance sheet. Any thoughts around uses of cash? Is it more likely that we see you best act in the market buying back stock or are you finding that there's not many windows period to do that, given all that is going on? Thanks.

Sure. In terms of Samsung, the intent and the purpose of the standstill was to give us time to negotiate a renewal, so there are active engagements at various levels that we are working and our hope is to work closely with them and move to a license renewal. Obviously, their products launched after the expiration of our prior agreement are no longer licensed and we obviously believe that they should be. So, we are actively working that.

The other issue as far as cash, you're right, the influx of the $19 million has substantially increased our cash balance. And as normal, we will consider uses of cash, including further legal actions, as well as buyback opportunities. When we make those decisions, we will make them public.

Great. Thanks so much.

Josh Nichols, B. Riley.

I was looking at the last 10-Q and I know that you won the arbitration with Sony. It looks like -- that was paid in Q2, right? So we should see that in the next quarter -- or in the current quarter, once the Q is filed?

So this was regards to the controllers they were selling in Japan. I believe that was resolved and paid in Q2 and recognized as well.

And it looks like, according to the Q, that you also filed an arbitration demand for their US controllers as well, in March. Is that correct?

That's correct, yes. Yes.

So what is that pertaining to specifically? Any details you could provide?

Well, we have 2,200 patents issued or pending. A number of those patents are covering technologies in the gaming space, and in addition in the VR space as well. And so, we have a lot of patents in this area.

It appears that Sony in our litigation many years ago, there were two patents in suit. Those two patents have expired and it appears that they are contesting our new patents, and so we are taking those through the arbitration process and have a lot of confidence in the strength of that IP.

Okay. And then, I just want to clarify because looking at revenue for the quarter, some people or some customers, or potential customers, haven't really acknowledged the Company's IP. Whenever you say that, are you referring to some new on-license customers that you were expecting to bring into the ecosystem faster or are you talking about some existing customers who are now not paying?

I would say primarily the new customers. We did have in the quarter a rather unusual situation where an existing customer did not file a report. Subsequent to the quarter-end, we did receive the report, but as a result, we were not able to record that revenue until we received the report.

So I would say that the point I was making is that in discussions in various markets we are providing them evidence of the strength of our IP, and in many cases those conversations go well and we reach agreement. In other cases, they dispute the applicability of that IP and it takes longer, then, to show them the legal arguments as to why they need a license.

And last question for me, so for the customer or customers that were late filing, then they did file and it's really just timing of revenue shift from Q2 to Q3, what is the dollar value impact that would have had? That would be one way for us to help us optically look at it, right?

Yes, sure. I was anticipating that the quarter would have come in around $8.5 million, and we ended up at $7.9 million. The unreported revenue that we now have received more recently was for about $700,000. So, the shortfall in anticipated revenue is attributed to that one late report.

Thanks, Vic.

Mark Argento, Lake Street Capital Markets.

Just a couple of quick questions around a couple of the key patents that were reinstated. Do you think some of the activity you saw in the quarter in terms of the willingness or, I guess, more of the unwillingness for guys to come to the table is a function of the state of those patents that have now been reinstated and this conversations maybe take a new life here, given the fact that those patents are now back on the -- back and valid? I would love some thoughts around that.

And then, if you could remind us about any key dates around your legal activities with Apple, that would be helpful as well.

Sure. So I think the basic HAPTIX patents that you are referring to, we had a lot of confidence that they would be returned to Immersion.

And as I said in the script, they are battle tested. I think they have all been challenged at the patent office and reissued. So we expected that. It is obviously nice to have happened. I do believe that it shows we have the determination to protect our IP; we have the resolve and the ingenuity, if you will, that we truly are bringing innovative solutions to the market and, as a result, are gaining these patents. So we felt good about that.

I would say that it's probably had some impact. Our behavior and the fact that those patents are now back on board I think has had some benefit to us for -- in the negotiations.

Look, for some of the bigger guys, they want to try to force the issues through the courts. They are using that as a proxy for negotiating a fair price. And I think our mission here is to stay resolute and make sure that we defend the IP because it is a great portfolio.

In terms of key dates, the first key date is October -- let's see. October 18 is when the Markman hearing and claims construction would be heard. Then the actual hearing itself, April 27 to May 5, 2017. The initial determination is August 11, 2017, and we would expect completion of the investigation December 11, 2017.

Great. Thanks, Vic.

James Medvedeff, Cowen and Company.

Good afternoon and thanks for taking my call. So most of my questions have been answered, but let me ask -- the mix between variable and fixed licenses, about 74% variable this time. Is that normal? Is that what we should expect going forward? And as some of these contracts are signed, especially the Samsung, how that might change?

It is going to be hard to tell. Many of our customers start out launching multiple products on a per-unit royalty basis and they will fall into that bucket. When they get to a point where they've broadly adopted a line of models and products, then they -- we may negotiate a more fixed payment stream.

The Samsung renewal, I would imagine that, like in the past, it was a fix, so I would imagine that a renewal would be a fixed payment. But it could also be per unit, depending on how those negotiations go.

So, it is a little hard to predict, but I would say the bigger ones are going to tend to be in the fixed and the smaller ones are going to continue to be on a per-unit royalty.

So as that happens, as more and more become -- as the bigger contracts become fixed, this phenomenon of people reporting late becomes less of an issue. Would that be fair to say?

Yes, absolutely. The fixed are typically payments due as a result of a contract, as opposed to determined by quarterly activity. So, yes, those fixed agreements would take that risk out.

Okay. My final question is on the pipe -- it is kind of a two-part question on the pipeline for some of your -- just on the pipeline of new business, new customers -- or new business from existing customers, and also when the content piece might start to deliver some revenue. The advertising (multiple speakers)

Yes, the pipeline is significant. As I mentioned before, we are building business development resource capability on the IP side. We have always been focused on selling the value of our solutions. We are getting a lot of interest on our IP, so we are spending more time and energy bringing those solutions and having the value evidence and the analytic evidence of that. So we are putting that together in packages that we can offer.

So I would say the pipeline in terms of new licensees in all the markets we serve or existing licensees that are growing and renewals, that pipeline is very significant and rich.

In terms of the content, it is definitely growing. We are increasing the use of HAPTIX in mobile video and ads in particular. The revenue stream is still -- I think this year will be under $1 million. Next year, I'd imagine it will be something north of $1 million, but I think before it becomes many millions of dollars it could be another few years. So right now, I think we are still establishing the value, building the relationships, launching the products, and building the foundation for a healthy business.

Thank you.

Matthew Galinko, Sidoti.

Thanks for taking my questions. The first one is you announced a two-tier strategy for TouchSense yesterday. Can you talk about what motivated -- how you evolved that strategy? Was it driven by what you are hearing from existing or potential customers, or is it just an interpretation from your end of how the device market is evolving?

Sure. The Premium -- the TouchSense Premium solution is targeted at the premium handset market that are typically using linear resonant actuator, LRA, motors. So these are higher-quality motors. And that software has been designed to be optimized for those types of actuators. We have added new features, including support for pressure sensing, which has become a very popular feature from a number of OEMs in multiple markets. So we are tailoring that solution to the high-end market.

And then, the mid to low-end markets typically use a lower cost actuator, a little less fidelity, and those are called Eccentric Rotating Mass, or ERM. And so, the light product actually is optimized for those types of actuators. It is also an easier solution to integrate. It can be integrated directly into the application, whereas TouchSense Premium is typically integrated at the OS level. So, a lot easier to use by our customers. It is tailored for the mid to the low-end market. And by offering the two, which has been requested by the marketplace, we think we grow the market substantially.

Got you. And then I guess, secondly, on new products, you touched on the TouchSense -- I'm sorry, the Design Cloud, I guess, just recently, so can you talk about how that evolves your monetization strategy for that piece of the business?

Sure. So as I have said now for a number of quarters, the content space is growing dramatically for us in terms of the usage and, more importantly, the interest level throughout the industry.

So, you do need to design good quality HAPTIX and the design tool is what we've now called the Design Cloud. We have been creating the content typically in house and building up postproduction capability. We are starting to exceed the capacity of Immersion doing all of the creative work and we want to provide the tools to the customers and the creatives. And we are getting a lot of interest from ad agencies and creative networks that want to begin offering this capability to their clients or their advertisers.

So we have actually productized this tool and we have given it a lot of flexibility by having it delivered through the cloud that allows you to create the content, edit the content, and then host the content in the cloud until the point at which you are ready to release the product to the marketplace. So this gives us control, gives more capability to the marketplace, and gives us a better opportunity to monetize the value we bring to the advertising community.

Got it. So if I might ask it in a different way, is it simply you are expanding your capacity and -- or expanding really beyond your capacity to get trials into the market and get testing and utilization into the market, or is it something that you will actually be charging for? And what is the timeframe for collecting? If you do plan to charge for access to it, when do you plan to start that?

Sure. So we took an internal tool and we created a product. The product allows people to create haptic tracks for a video ad in advertising. We will charge for it, but it won't be a significant revenue stream. It is a tool.

The purpose really is to hand the capability -- put the capability in the hands of the ad agencies and the creative brands, and then let them launch. Without having Immersion doing the creative work, it is a way for us to scale and leverage the technology.

Got it. Thank you.

(Operator Instructions). Tony Stoss, Craig-Hallum Capital Group.

This is Lucas Schwalbe in for Tony Stoss. So, most of my questions have pretty much been answered at this point, but maybe you could comment a little more on the deal with Lenovo. Do you think it could be material in the next year or two?

Yes, sure. Well, Lenovo is a world-class company. They offer a broad product line in multiple markets, and we believe that they are a significant leader in the marketplace, so having a relationship direct with them is important.

As you probably know, we have an indirect relationship with our arrangement with Motorola, which is a subsidiary of Lenovo. But having the direct relationship and being a part of their product roadmap is exciting. I think the early engagement will be around a number of products, and as we build the value evidence and as those products succeed in the marketplace, then I would expect to expand the relationship into more models, more products, more markets.

So, we think that it is the beginning of a great relationship. I can't really provide you any near-term revenue targets. Just simply say it is a great relationship and one we think that could grow into something real meaningful.

Okay. Thank you. And then, outside of mobility and media advertising, which area are you most excited about -- by, like gaming, medical, auto? Where are you seeing the most traction?

Yes, I would say those are -- auto is clearly an exciting area. As I mentioned, bringing on board an IP BD function is going to allow us to target the auto market, the VR market, and gaming space in particular, as well as wearables. So those are exciting markets for us.

The base of business today is still very small, so it has the potential to be a meaningful part of our growth. And it is one that I think we are very focused on in IP licensing.

Thanks. I think that's it for questions I have. Thank you.

Mark McMahon, LPL Financial.

Thanks for taking my questions. Speaking of which, they have all been pretty much answered. However, I thought I would share a thought, just to put this out there. With the uncertainty regarding a near-term deal with Samsung, which indicates that you've -- that has translated into some uncertainty with an existing customer, has coincided with the largest short position that I have ever witnessed in your stock, over 3 million shares as of last count.

Are there things that you can do to sort of show some additional confidence? I know that you are sort of saving firepower for your cases against Apple and AT&T, and so you have suspended the stock purchase program. But that or insider purchases just send a signal to the investment community that you guys see a very strong outlook, despite the near-term uncertainty. I would just share with you that the people that I work with are looking for those kind of signs when you are seeing this kind of weakness in the stock price.

Okay, Mark. I appreciate the thoughts and the comments.

I would say that we did not suspend the buyback program. In order to have a plan in place that is executable, we normally would put a 10b-5 program in place. And there are times when we are not allowed to do that because we are aware of private and confidential information. I would say that now that we have announced Samsung in the quarter, I would say that we are probably no longer precluded and we will take a serious look at the buyback program.

And that will be all the questions. I will turn the call back over to Mr. Viegas for any additional or closing remarks.

Thank you again, everyone, for being on the call with us today and I wish you a good day. Bye.

And that will conclude today's call. We thank you for your participation.