Consecutive quarters of poor performance has had a decisive negative impact on the stock. The break below $20, and now below $15 indicates that there could be more pain in the offing. The stock needs to bounce immediately with good volumes, otherwise it may go down by another 10%. The main problem is the unpredictability in the earnings which makes it difficult to take a call on the future valuations. The fluctuations in the top line and the bottom line have decreased the faith of the investors over the last few quarters. The stock is now one third of its peak value in September 2011. The revenue stream is not diversified and there is excessive dependence on a few licensees. Even other similar sized companies may have a similar problem, but it is important for Acacia to do something about it fast. Lawsuits outcomes are unpredictable, and many companies in the sector are making efforts to diversify the IPR portfolio and focus on licensing revenues to get regular inflow. Marathon Patents Group (MARA) is attempting a balance between diversified licensing revenue stream and enforcement through litigation. Zacks now has a strong sell rating on Acacia, and the full year EPS for 2013 is estimated at 33 cents which indicates that the valuations are likely to remain high. The counter lawsuit by Microsoft (MSFT) has also had an impact on the sentiments. Microsoft has accused Acacia of claiming payments based on litigation tactics rather than demanding payments based on the actual valuation of its patents. The good part is that the company is debt free and has a huge amount of cash. However, the recently announced repurchase program will lead to some depletion over the next few quarters. The program is for purchase in the aggregate up to $70 million of its common stock through the period ending May 14, 2014.
