The decline in revenues is surely alarming because of its magnitude. Companies have to maintain a level of revenues to be able to meet the fixed costs. This is especially true if the margins are not very high. The net loss in the second quarter, has stretched the ttm valuations even further. In fact, it is now carrying a loss on a ttm basis. The outlook has become negative. Wild fluctuations make it difficult for analysts to predict the forward P/E etc. The good part about Acacia is that the company does not have any debt on books. It has a good amount of cash , and the high current ratio indicates good liquidity position. Another positive is that it is operating in a business segment with good growth. There are several opportunities of patent acquisition / monetizing. However, the growth opportunities are also attracting competition as companies like Spherix (SPEX) have also become more aggressive with several acquisitions. Acacia manages hundreds of patents collections in the technology, power and other segments. The recent poor performance has been explained by the firm by stating that the financial terms of its patent acquirement contracts vary based on the sum of incomes documented each phase, the blend of copyright portfolios yielding income and the terms of contracts accomplished during the period. The bottomline was affected as the lawsuit and licensing expenditures increased substantially, mainly due to increase in examination and enforcement expenditures and advanced 3rd party consulting costs connected to licensing and enforcement plans. The company accomplished 43 novel contracts during the quarterly period compared to 38 during the last year period. So the potential is definitely there, but the last few quarters are reflecting that the company is not able to leverage the growth opportunities to its advantage. Hopefully, the next quarter will be better, and the company will get consistent over the longer term. More negative surprises will definitely cause serious damage.
