Quarterhill Inc T.QTRH

Keeping an eye on Wilan

[cabbieJBJ]

New action filed Friday, 13-SEP-2024, in WDTX v. Qualcomm.  Action is 6:24-cv-00472

"Since August 2014, Collabo Innovations, Inc., a Wi-LAN subsidiary, has been litigating a portfolio of patents received in 2013 from Panasonic, doing so across three campaigns as a formal matter. In February of this year, the last active case, against AMD in the Western District of Texas, was dismissed with prejudice after the parties noticed a resolution. Now, Collabo has sued Qualcomm over the same single patent, generally related to a conserving power in a microcontroller. The accused products include “Qualcomm processors such as the Qualcomm Snapdragon 600 Processor APQ8064 and other processors and platforms offered and sold by Qualcomm that support low power state with power collapse (and similar functionality)”.  RPX Weekly Newsletter

[Staydotcalm]

We need an update on where Quarterhill stands in relation to the earnout payments. I have reached out to Dave Mason 3 times and have had no response???????

[cabbieJBJ]

Staydotcalm - I've also reached out and have discussed this (briefly) with DM since the Q2 results, in view of the new information regarding the agreement with MSFT; I also discussed it after the Q1 results.  While DM was vague, I believe it was because QTRH simply is not in control of the decison; further, interface with Owlpoint rests exclusively at the CEO/CFO level.  DM did

[Staydotcalm]

Thank you Cabbie!

[mrmoribund]

Cabbie, tell me if I have this right. My understanding is that the final buyout of Quarterhill's 10% is restricted to a range of $13-16 million. There may be some other performance payments as well but they're not huge. My point here . . . well . . . let me put it this way. Suppose, hypothetically, Wilan achieved a settlement where they received, say, $10 billion. Would this mean

[cabbieJBJ]

You are correct mrmoribund. 

[mrmoribund]

Okay, then there's not really much at stake (for Quarterhill) in Wilan performing well. If / when Wilan achieves a big payday it will only make it more likely that Quarterhill will get: (1) $16 million instead of $13 million; (2) whatever they get SOONER (because paying off Quarterhill will stand in the way of Wilan paying a dividend or other distribution to their other shareholders).

[mrmoribund]

I think private companies will often make big distributions to shareholders early in a new year--because they will then get their $$ as early as possible while having the tax consequences bumped to one year later. So if Wilan really has achieved a big settlement then it would make sense that they distribute to their shareholders in January 2025--and pay Quarterhill to go away just before then

[BuyNmonitor]

I have not read the agreements.   But, unless it was bad negotiation by our team, or bad drafting by QTRH's legal counsel, I suspect the earnout is payable regardless of the ownership position, and the value of 100% of the business (and thus the base calc for the value of QTRH's 10% ownership) would be net of earnout obligations that have not yet been paid out.  But I could

[cabbieJBJ]

BuyNmonitor, here is the pertinent info from the news release (https://ir.quarterhill.com/news/news-details/2023/Quarterhill-Announces-the-Sale-of-Wi-LAN-Inc/default.aspx): TORONTO, June 15, 2023 /PRNewswire/ - Quarterhill Inc. (TSX: QTRH) ("Quarterhill" or the "Company") announced that today it has completed the sale of all of the shares of Wi-LAN Inc. ("

[mrmoribund]

So, according to that, if Wilan produces really strong results, Quarterhill will eventually receive $39.4 million plus any interest accumulated on the promissory note.

[cabbieJBJ]

Yes mrmoribund, that is my read.  Timing TBD, tho.

[ElJ]

I agree with the assessments of our well respected colleague BBoard poster here cabbieJBJ and  mrmoribund... considering the source document  issued on June 15, 2024 where the statement released by Quarterhill included that:  " it has completed the sale of all of the shares of WiLan Inc. ("Wilan") to an arm's length purchaser of up to approximately $71.4 million

[cabbieJBJ]

mrmoribund, it may not quite so simple.  There may be requirements to adress the milestones before the equity.  Anyway, it's all speculation.  When it happens (notice I say when, not if), it'll be a surprise for the stock price.  As I said, I do not think anything further from the Wilan sale is baked into the SP.