Wi-LAN plays it smart with Telus

On the list of interesting tech plays in Canada, I continue to think Wi-LAN (WIN:TSX) is worthy of interest on a number of levels.

Although venture capital funds never played a role, which is part of an unfortunate reality (see prior post “Financing IP firms” May 1-07), Canadian retail investors continue to have the opportunity to play a patent strategy via this unique situation. Wi-LAN is usually doing the suing, so it was telling to see how they’d react to a wireless patent lawsuit filed by Telus.

With the news out that the two firms have signed an LOI to settle their dispute, here’s the take from the equity research team at WWCM:

Telus Risk Removed; Markman Hearing in March is a Key Catalyst

• LOI signed with TELUS to settle lawsuit over wireless patents. We always believed the TELUS claims were without merit and we are pleased management has been able to quickly resolve the issue.

• Investors should buy WIN on the recent weakness before Markman.
With this uncertainty out of the way we believe the Markman hearing could be a catalyst for large wireless defendants to take a license.

• WIN has signed 84 wireless licenses including Nokia, RIM, Panasonic. Some of the large wireless defendants in the Markman include Apple, HP, Dell, Toshiba. A single large win apt to be materially positive for the stock.

• Reiterate Strong Buy rating and $3.70 target. We believe the risk/reward is very compelling with the wireless opportunity coming to a head. Our $3.70 target implies 19x C10E EPS.

Wi-LAN CEO Jim Skippen is doing a great job.

MRM