Patent licensing company Wi-LAN Inc. swung to a loss in the third quarter on litigation costs that more than doubled over the year-earlier period.
Ottawa-based Wi-LAN, which said last month it is exploring strategic alternatives including a possible sale of the company, posted an adjusted third-quarter loss of $300,000 (U.S.) or zero cents per share, compared with profit of $9.3-million or 8 cents.
The company said its litigation expenses in the third quarter reached $14.4-million, up from $7.1-million in the same period last year.
Wi-LAN shares fell almost 23 per cent on Oct. 24 after a jury decision in litigation with Apple Inc. in Texas went against it.
The company said at the time that it continued to have a strong financial position and that the patent at issue expired in just over three months and is but one patent in a portfolio of more than 3,000.
Wi-LAN’s main business is buying and developing technology patents in order to license them to some of the largest companies in the sector. If it believes companies have infringed on its patents, it proceeds with legal action against them.
Litigation expenses should come down in the fourth quarter and beyond that “commensurate with the overall level of litigation activity,” the company said Wednesday.
“Our third quarter financial results met guidance,” said president and chief executive officer Jim Skippen.
“During the quarter, WiLAN returned over $7.8-million to shareholders in dividend and share buyback payments.
“Agreements signed in the third and fourth quarter with Alcatel-Lucent, BlackBerry, HP, HTC, Novatel and Sierra Wireless will contribute to the strong financial performance expected in the fourth quarter.”
Wi-LAN’s cash position at Sept. 30, 2013 was $142.3-million, a drop of $34.6-million from the cash position at Dec. 31, 2012, the company said.
The decrease is due mainly to the $11-million in cash for operations, total dividends of $13.9-million, the repurchase of common shares totalling $5.8-million and $3.7-million for the purchase of patents and other intangibles, said Wi-LAN.
The company says it anticipates revenue of at least $28.4-million in the fourth quarter.
Litigation costs in the fourth quarter are expected to come in at between $6.3-million and $8-million, and adjusted earnings at between $12.5-million and $15-million.
Last month, Wi-LAN said its board has launched a process to assess a “broad range” of options, including changes to the dividend policy or other forms of return of capital to shareholders, the acquisition or sale of assets, joint ventures, the sale of the company, alternative operating models or continuing with the existing business plan.