|Shares Out. (in M):||50||P/E||9.9x||8.8x|
|Market Cap (in $M):||862||P/FCF||10.3x||9.5x|
|Net Debt (in $M):||-438||EBIT||143||160|
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TSRA is primarily a semiconductor intellectual property (IP) firm with 2 additional divisions that are currently unprofitable (imaging/optics IP and silent air cooling for laptops).
TSRA is trading at a massive discount to other semiconductor IP firms given what we believe is an incorrect perception that the company's royalty stream will end starting in mid 2012 as existing contracts begin to expire. There are several catalysts outlined below that could result in a significant increase in valuation. In particular, based on our due diligence, we believe TSRA's key customers will renew their licenses (see "Bear Case and Counter Argument" below).
TSRA's primary source of revenue is royalties from the packaging of semiconductors (this is over 100% of EBIT). Importantly, TSRA is paid based on chip volumes which have grown at a 21% CAGR for the past 5 years.
BEAR CASE AND COUNTER ARGUMENT
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