RE:RE:RE:Contra the Heard - QTRHJoey, I share your point on the CEO. Timeliness and quality are very, very important. However, I do not share your view on the urgency of the divestment of Wilan.
Here's the "sell Wilan" challenge as I see it.
The licensing infrastructure, the Wilan licensing team, has a base value. That's probably relatively easy to agree on a number.
Then there are the variables: active litigations (AMD, Broadcom, TCL, Nanya, Microsoft and Google to list the major ones). This is where there's a valuation gap. Time and probability to secure revenue. The USB-C opportunity awaits the EU's declaration on standards, which is expected in the coming weeks.
Here's an example. AMD is probably closest to closing as it is now a contract dispute and the timeline is easier to agree - let's say it's one year and a 10% time discount is applied; let's say the projected potential is $50M and that an interested buyer pegs the likelihood of winning a 20% and Wilan believes it is 75%. So the buyer calculates the AMD value at $9M but Wilan gets a $34M value. The difference is $25M. That may be the easiest contract to value. Multiply that by ten. Progress in licensing negotiations or litigation developments can change the assessments - and that is why Gillberry said that QTRH continues to engage with interested parties. This an obvious reference to sharing information as it crystallizes through court orders or private discussions with potential licensees.
So it is in QTRH's best interest to secure early settlements, especially if the settlement is above the buyer's valuation assessment. Then that variable can be backed out of the overall valuation. I'd rather settle two or three of the above mentioned litigations and then be able to lower my ask price. For example, it’s preferable to secure a settlement with a value of $50M to Wilan and a sale price of, pick a number, say $30M (total $80M) than take an offer of $50M. The strategy is simple; it is the execution that is complicated. Just my opinion.
As you know Joey, I have strongly advocated in the past for a rapid divestiture of Wilan as an acquisition funding source – particularly against a backdrop of rising ITS valuations. It is now clear to me that M&A urgency is off for 2023 as M&A seems to have been back-burnered as cost management and organizational efficiency take center stage and overall valuations have pulled back. There was not a mention of M&A in the AGM presentation.