Tessera Technologies Inc. TSRA
Tessera has squandered $517M on the failing Digital Optics business while its core patent-licensing franchise shrinks; Starboard's six-director slate and IP-focused plan can unlock best-in-class 60-70% EBITDA margins.
Thesis
Starboard owns 7.7% of Tessera Technologies and is running a proxy fight for six board seats at the May 23, 2013 annual meeting. The deck argues that under Chairman Boehlke and former CEO Bob Young, revenue fell 22% from 2009-2012 while operating expenses rose 41%, turning $118M of operating income into a $38M loss. The root cause is $517M of cumulative losses and investment in the non-core Digital Optics (DOC/MEMS camera-module) business — a strategy Tessera serially missed commitments on — while the core patent-licensing franchise was neglected. Starboard's six-nominee slate (including ARM co-founder Tudor Brown, former MOSAID CEO George Cwynar, and NTP co-founder Donald Stout) would cut R&D and SG&A, reinvigorate licensing across DRAM, microprocessor and microcontroller markets, partner out DOC, and return capital — targeting 60-70% best-in-class EBITDA margins.
SCQA
Tessera Technologies is a semiconductor IP licensing company with a high-quality portfolio of 3,300+ chip-packaging patents that generated $286M in peak royalties but has been declining toward a Q1 2013 run-rate of $107M.
Management has buried the cash-generative IP franchise under $517M of losses in the non-core Digital Optics/MEMS camera-module business, ballooned headcount 161%, and serially missed every DOC commitment across four CEOs.
Elect Starboard's six-nominee slate — IP veterans from ARM, MOSAID, NTP and Nortel — to cut costs, exit DOC via partnership, monetize the Invensas and DOC patent books, and return capital.
Refocused on IP, Tessera can achieve best-in-class 60-70% EBITDA margins, unlock a $500M+ annual licensing opportunity outside DRAM, and close the dramatic five-year underperformance of ~76% versus NASDAQ.
The three reasons
- 1
Tessera squandered $517M on the failing Digital Optics business since 2005
- 2
Stock underperformed NASDAQ by 76% over five years under serial CEO turnover
- 3
Refocused IP licensing could unlock $500M+ annual opportunity at 60-70% EBITDA margins
Primary demands
- Elect Starboard's six-nominee slate at the May 23, 2013 annual meeting
- Reduce IP cost structure (R&D, SG&A, litigation)
- Reinvigorate patent licensing across DRAM, microprocessor and microcontroller markets
- Form a strategic partnership or exit the Digital Optics (DOC/MEMS camera-module) business
- Expand patent portfolio via revenue-share partnerships and small tuck-in acquisitions
- Return excess cash to shareholders via dividends and buybacks
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Precedents cited
- AOL IP portfolio sale to Microsoft ($1.1B)
- MIPS Technologies two-part transaction (IP + operating business)
- Unwired Planet / Ericsson patent contribution
- Nortel patent auction ($4.5B to Rockstar consortium)
- ARM Holdings IPO-to-$17B growth (Tudor Brown)
- MOSAID Technologies transformation (George Cwynar)
- NTP Inc. patent-holding playbook (Donald Stout)
- Phoenix Technologies turnaround (Thomas Lacey)
Notable slides (6)
Notes
Proxy fight deck filed ahead of Tessera's May 23, 2013 annual meeting. Exemplary CEO-quote-contradiction slide on p.12 (seven failed DOC/MEMS commitments matched to 'Failed Reality'). Strong segment-level framing: splits Tessera into IP vs DOC, shows IP pays for the failing DOC adventure. Starboard's 'IP playbook' is explicit via its director slate CVs (ARM, MOSAID, NTP, Nortel) — nominees used as walking precedents. Valuation argued via EBITDA margin target (60-70%) and illustrative licensing opportunity math rather than explicit per-share price target. Visual craft is standard institutional PowerPoint — Times Roman body, blue headers — not a craft exemplar but narrative construction is strong.