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A Reality Check ... by wilander on SH

Wilan Reality Check!

If you look at the facts, it has become abundantly clear that not only is Wilan undervalued and overlooked but has suddenly become an investment opportunity of a lifetime. One of those rare moments when a stock is completley out of sync with the reality of where it should be, which enables you an amazing return on your investment dollar.

Just over a year ago there was an article by Nick Waddel that explained how Wilan was "worth $5 all day long". http://www.cantechletter.com/2012/11/wi-lan-is-worth-5-all-day-long-says-byron-capitals-astle1126/

"Byron Capital analyst Tom Astle, who met with management recently, says his sum-of-parts/net present value calculation, based on booked business, patent portfolio business and cash indicates that even if the company’s business stopped operating tomorrow Wi-LAN shares should be worth about $5." (Nov 2012)

Since that article we have fallen to a low in the mid three's and now low $4's.

HOWEVER, SINCE THAT ARTICLE, we have signed and added: Alpha Networks, Kith, Media Tek, Panasonic, Telrad, Unnecto, Samsung, Doro AB, Alacatel Lucent, Dell, HTC, Sierra Wireless and BB.

SINCE THAT ARTICLE we have signed partnerships with British Telecom and Espial.

SINCE THAT ARTICLE we have acuired more patents including Cypress Semiconductor portfolio.

Not to mention we have been able to erase about 80% of all litigation -- AND THUS LITIGATION COSTS -- going forward from the recent flurry of settlements.

These facts alone resolve to a sp that should be in the $6-8 range. (If we land Apple as expected it should be $7-9 easy.)

In fact, CIBC recently issued a report stating that Wilan should be at $12 if it was priced like its peers: "we estimate the market has not ascribed any value to the upcoming Apple trial and therefore believe the shares have the potential for a continued material re-rating. To illustrate a point, if WIN were to trade at an equivalent multiple as its peers it would imply a C$12.00 share price. Applying a 10x P/E multiple to our FY14 adjusted EPS of $0.69 (unchanged) gives us our C$7.00 target price (unchanged)."

And this was BEFORE the Sierra Wireless signing.

The bottom line is we are now looking at high revenues and low costs going forward.

Civis on the yahoo board points out:
~1.30 in cash

- maybe something like another 30 to .50 per share coming from past infringement (really have no idea on this point except the windfall from 2011 success)

- maybe > 100 M for annual earnings at 2011's 60%+ margin for 60 M in revenue or .50 per share

- something like 10x for SP

- no credit for future potential (which is much standard for WIN)


- So a new equilibrium price around $6 - $7. We might go thru a period where it trades 30-50% above that, so in the $8-$11 range.


- a 25-30% increase in divs.

BOTTOM LINE: Wilan has been punished for its slow legal resolutions and failures the last two years -- likely deservedly so. BUT if you take a good look at what has actually happened in 2013 and the amount of rev's to be coming in now with very little costs going forward you rarely find a SCREAMING BUY like Wilan.

The beat at the next CC in November and revised guidance and dividend increase should blow the doors off this stock. (Unless of course,as many point out, we are not sold or merged by then, or the stock finally finds its deserved legs and begins a prolonged run before then.)

This has been a frustrating stock to own but there is no question the reward is about to be realized. I am glad I got in beofre everyone else realizes it. (That is the goal of investing!)

Happy investing!