Over the past few months, San Jose-based digital optics manufacturer Tessera Technologies, Inc. (NASDAQ:TSRA) has made several announcements that have the potential to affect its current and future shareholders. Some of these announcements point to one-off events like the issuance of a special dividend. Others concern the state of the company’s board and could have long-lasting ramifications on its direction.
Meanwhile, Tessera Technologies, Inc. (NASDAQ:TSRA) has also come forward with a small but meaningful share repurchase program that could result in the cancellation of a decent amount of its share float.
Taken together, these events make Tessera Technologies, Inc. (NASDAQ:TSRA) an interesting name to watch. With the company seriously considering a spin-off of its digital imaging and optics division similar to other tech companies, it appears to be at a major turning point. While no one is suggesting that missteps could put it on the road to existential ruin, it is clear that the decisions that Tessera Technologies, Inc. (NASDAQ:TSRA) makes over the coming quarters will have long-term ramifications. With this in mind, investors would do well to take a closer look at what the company has to offer.
Tessera Technologies, Inc. (NASDAQ:TSRA) vs. the competition
Tessera Technologies, Inc. (NASDAQ:TSRA) operates in the high-tech world of camera module manufacturing, digital imaging, and photographic manipulation. Many of its signature camera modules end up in smartphones, and its imaging technology is useful for a diverse base of clients that includes professional photographers and bar code scanner manufacturers. Its two biggest public competitors are Taiwan-based Advanced Semiconductor Engineering (ADR) (NYSE:ASX) and Amkor Technology, Inc. (NASDAQ:AMKR) .
Tessera is not a particularly large company. Its $1 billion market capitalization compares favorably to Amkor Technology, Inc. (NASDAQ:AMKR)’s $690 million figure, but remains considerably smaller than Advanced Semiconductor Engineering (ADR) (NYSE:ASX)’s $6.3 billion. In 2012, Tessera lost about $66 million on $192 million in gross revenue. This compares unfavorably to Amkor Technology, Inc. (NASDAQ:AMKR)’s earnings of nearly $600 million on a total take of $2.8 billion. Although Advanced Semiconductor Engineering (ADR) (NYSE:ASX)’s 2012 profit of $454 million on $6.8 billion hinted at falling margins, the Taiwanese firm remains comfortably profitable. Both Advanced Semiconductor Engineering (ADR) (NYSE:ASX) and Amkor Technology, Inc. (NASDAQ:AMKR) have profit margins of around 4% while Tessera is around (34)%.
Fortunately, Tessera lacks meaningful long-term debt and has more than $400 million in cash on its books. In comparison, Amkor Technology, Inc. (NASDAQ:AMKR) and Advanced Semiconductor Engineering (ADR) (NYSE:ASX) both have about three times as much debt as cash.
