Zen Money News Issue 035 101812
Hot Penny Stocks – Pendrell Corporation (PCO)
Bob Harper, Managing Editor, The Zenect Wealth Report
On The Radar Report
Few people foresaw the massive transformation media distribution would experience over the past decade. Digital distribution methods combine convenience for the user with a relatively low cost distribution method for the provider.
The dawn of mobile computing has served as an unparalleled catalyst for the rapid growth of demand for digital media. One of the challenges of this distribution method is ensuring intellectual property rights holders receive proper compensation
Today’s company is positioning itself to become a leader in digital rights management. Its holdings already include hundreds of industry patents and licensing agreements with many leading content distributors.
Industry Wireless Communications
Recent Price $1.16
Market Cap $296.6 m
Shares Outstanding 255.7 m
Average Volume 640,350
Dividend Yield N/A
Pendrell Corporation (PCO) has spent the past two years transforming from a next-generation mobile satellite service (MSS) provider into an investment firm focusing on intellectual property (IP) technology.
Notable Sales and Acquisitions
March 2011 – The company sold an MSS related holding, DBSD North America, Inc., to DISH Networks (DISH) for $325 million.
June 2011 – PCO purchased Ovidian Group, LLC, an IP advisory firm, for $6 million and 3 million shares of common stock to the former owners.
October 2011 – Pendrell purchased 90% of the outstanding capital stock of ContentGuard Holdings, a leading Digital Rights Management (DRM) technologies developer.
This type of intellectual property protection is an integral part of digital content distribution models.
Companies including LG Electronics, Microsoft, Panasonic, Sharp, Sony, and Fujitsu currently have licensing agreements with ContentGuard.
PCO’s most recent quarterly numbers were released on August 3, 2012.
The company reported revenue of $20.8 million in the quarter. Up from last year’s second quarter revenue of $195,000. This is an increase of 10,563%. Pendrell Corporation also reported net income of approximately $62.2 million… a year-over-year increase from a net loss of $2.2 million.
Net income was three times higher than revenue because of a $48.7 million gain on deconsolidation of subsidiaries, as well as a $10 million settlement from litigation with Boeing.
As of June 30, 2012, the company reported $211.9 million in cash and no long-term.
KEY METRICS ANALYSIS
Trailing P/E 3.8 x
Price / Sales 10.9 x
Return on Assets -3.5 %
Insider ownership 28.8 %
Short Ratio 8.7 x
Current Ratio 30.7 x
Total Debt to Equity N/A
During the first quarter of 2012, PCO sold their Brazil property and other satellite related assets for $5.6 million. The continuing divestiture of satellite assets in the first half of 2012 eliminated approximately $61.9 million in related liabilities.
Boeing Pays PCO $10 Million
In May 2004 litigation began over a dispute with Boeing Satellite Services. The dispute pertained to the manufacturing and management of the company’s medium earth orbit satellite. In February 2009 the trial court ruled in favor of Pendrell for approximately $603.2 million.
On April 13, 2012 a California Appellate Court overturned the ruling. In a June 2012 settlement, Boeing agreed to pay PCO $10 million and waive appellate costs. This was in exchange for PCO dropping their petition for review to the California Supreme Court.
Benjamin G. Wolff – CEO and President
R. Gerard Salemme – CSO and Executive Vice President
Robert Jaffe – Vice President, General Counsel and Corporate Secretary
Mario Obeidat – Vice President, Licensing
Tom Neary – Vice President and Chief Financial Officer
PCO’s 52-week low was $0.96 and the 52-week high was $2.94. Right now the stock is trading at $1.16. The 50-day moving average is near $1.15 a share and the 200-day moving average is at $1.30. The company has a market cap of $296.6 million and 255.7 million shares outstanding.
Chart Courtesy of StockCharts.com
*All ratios and figures updated on 10/14/12
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