Acacia Research-Acacia Technologies (ACTG)

[investora2z]

The bad results have had a huge negative impact on the stock. It went from $29.5 to $21.50 in one day with volumes of nearly 6 million shares. Both revenues and net income plunged. Revenues declined to $76.86 million compared with $99.04 million last year. The net income for the quarter was $5.11 million compared with $49.93 million (YoY). Acacia has meanwhile become relatively more stable and is moving towards the 200 DMA of $26. This level will not be easy to cross. The force of the fall can be gauged with the fact that the 10 day trading volume (1.84 million) average is more than double the average for 3 months (739K). The minor recovery from the recent low has been supported by decent volumes, but till the 200 DMA is crossed, the trend will remain negative. In addition, there is news of an investigation on behalf of investors for potential securities laws violations by Acacia and certain of its directors and officers in connection certain financial statements. There are allegations of material misstatements. This news at a time like this will obviously make things very difficult. The ttm P/E is now 77, and the forward P/E of around 8 has to be reconsidered. Price to sales is nearly 5, and price to book is 1.80. Acacia subsidiary recently acquired 40 patents related to microprocessor and memory technologies as part of its continuous endeavor to expand its patent portfolios. Patent monetizing is big business now with companies even changing their business model to become more focused on optimizing IPR values. Spherix Inc. (SPEX) recently sold its consulting division to concentrate on drug development so that it could build an IPR portfolios. Spherix is into research for drugs for diabetes and other diseases, and the trials have given encouraging results. For Acacia, the good thing is that it is debt free and had good amount of cash on books. Fundamentals apart, the biggest worry now is the investigation.