Immersion Corp. (IMMR, Financial) filed Quarterly Report for the period ended 2009-03-31.
IMMERSION CORP. develops hardware and software technologies that enable users to interact with computers using their sense of touch. Their patented technologies which are branded TouchSense enable devices such as mice joysticks knobs and medical simulation products to deliver tactile sensations that correspond to on-screen events. They focus on four application areas: computing and entertainment medical simulation professional and industrial and three-dimensional capture and interaction. Immersion Corp. has a market cap of $112 million; its shares were traded at around $4.01 with and P/S ratio of 3.1.
Royalty and license revenue Royalty and license revenue is comprised of royalties earned on sales by our TouchSense licensees and license fees charged for our intellectual property portfolio. Royalty and license revenue for the three months ended March 31, 2009 was $3.8 million, an increase of $320,000 or 9% from the three months ended March 31, 2008. The increase in royalty and license revenue was primarily due to an increase in royalty and license revenue from our Touch segment from increased shipments by licensees of mobile devices partially offset by decreased shipments by gaming and automotive licensees. We expect royalty revenue to be a significant component of our revenue as our technology continues to be included in mobile phone handsets and other mobility devices.
Based on our litigation conclusion and new business agreement entered into with Sony Computer Entertainment in March 2007, we are recognizing a minimum of $30.0 million as royalty and license revenue from March 2007 through March 2017, approximately $750,000 per quarter. The revenue from our third-party peripheral licensees included in royalty and license revenue has also generally continued to decline primarily due to i) the reduced sales of past generation video console systems due to the launches of
Product sales Product sales for the three months ended March 31, 2009 were $2.8 million, an increase of $82,000 or 3% as compared to the three months ended March 31, 2008. The increase in product sales was primarily due to an increase in medical product sales. Increased medical product sales was mainly due to increased sales of our endovascular and laparoscopy simulators. This increase in product sales was a result of pursuing a product growth strategy for our medical business, which includes leveraging our strategic industry alliances, and expanding international sales. We expect that the current economic downturn may have a negative effect on capital purchases of our products in the near term.
Development contract and other revenue Development contract and other revenue is comprised of revenue on commercial contracts and extended support and warranty contracts. Development contract and other revenue was $446,000 during the three months ended March 31, 2009, a decrease of $353,000 or 44% as compared to the three months ended March 31, 2008. The decrease was mainly attributable to a decrease in medical contract revenue of $535,000 due to the completion of work performed under medical contracts that occurred through the first six months of 2008. Partially offsetting that decrease was increased revenue recognized on Touch development contracts and support of $182,000. We do not currently have any government projects in development. We continue to transition our engineering resources from certain commercial development contract efforts to product development efforts that focus on leveraging our existing sales and channel distribution capabilities.
Cost of Product Sales Our cost of product sales (exclusive of amortization of intangibles) consists primarily of materials, labor, and overhead. There is no cost of product sales associated with royalty and license revenue or development contract revenue. Cost of product sales from continuing operations was $1.1 million, a decrease of $557,000 or 33% for the three months ended March 31, 2009 as compared to the three months ended March 31, 2008. The decrease in cost of product sales was primarily due to reduced obsolescence expense of $209,000, reduced direct material costs of $134,000, and reduced overhead costs of $120,000. The decrease in obsolescence expense was mainly due to lower excess and obsolescence write-off from medical, touch, and other parts in 2009. The decrease in direct material costs was mainly the result of a product mix change in medical product sales where we sold a greater percentage of products with higher margins. Overhead costs decreased mainly as a result of reduced salary expense from decreased headcount. Cost of product sales decreased as a percentage of product revenue to 41% in the first three months of 2009 from 63% in the first three months of 2008. This increase is mainly due to the reduced costs and the change in the product sales mix mentioned above.
Read the The complete ReportIMMR is in the portfolios of Richard Perry of Perry Capital.
IMMERSION CORP. develops hardware and software technologies that enable users to interact with computers using their sense of touch. Their patented technologies which are branded TouchSense enable devices such as mice joysticks knobs and medical simulation products to deliver tactile sensations that correspond to on-screen events. They focus on four application areas: computing and entertainment medical simulation professional and industrial and three-dimensional capture and interaction. Immersion Corp. has a market cap of $112 million; its shares were traded at around $4.01 with and P/S ratio of 3.1.
Highlight of Business Operations:
We achieved a 1% increase in revenues from continuing operations during the three months ended March 31, 2009 as compared to the three months ended March 31, 2008. The first three months revenue growth was primarily due to a 9% increase in royalty and license revenues from increased Touch royalty and license fees mainly from customers that sell mobile devices. The revenue increase also included a 3% increase in product sales partially offset by a 44% decrease in development contract revenues. In conjunction with our plan to move our medical operating segment to San Jose and other workforce reductions in our Touch segment, we had restructuring costs relating to workforce reductions of $646,000. We divested our 3D product line and recorded a gain of $235,000 from discontinued operations for the three months ended March 31, 2009 as compared to a gain of $322,000 for the three months ended March 31, 2008. We also had a gain on sale of discontinued operations of $167,000 for the three months ended March 31, 2009. Our net loss was $7.5 million for the three months ended March 31, 2009 compared to a net loss of $2.6 million for the three months ended March 31, 2008.Royalty and license revenue Royalty and license revenue is comprised of royalties earned on sales by our TouchSense licensees and license fees charged for our intellectual property portfolio. Royalty and license revenue for the three months ended March 31, 2009 was $3.8 million, an increase of $320,000 or 9% from the three months ended March 31, 2008. The increase in royalty and license revenue was primarily due to an increase in royalty and license revenue from our Touch segment from increased shipments by licensees of mobile devices partially offset by decreased shipments by gaming and automotive licensees. We expect royalty revenue to be a significant component of our revenue as our technology continues to be included in mobile phone handsets and other mobility devices.
Based on our litigation conclusion and new business agreement entered into with Sony Computer Entertainment in March 2007, we are recognizing a minimum of $30.0 million as royalty and license revenue from March 2007 through March 2017, approximately $750,000 per quarter. The revenue from our third-party peripheral licensees included in royalty and license revenue has also generally continued to decline primarily due to i) the reduced sales of past generation video console systems due to the launches of
Product sales Product sales for the three months ended March 31, 2009 were $2.8 million, an increase of $82,000 or 3% as compared to the three months ended March 31, 2008. The increase in product sales was primarily due to an increase in medical product sales. Increased medical product sales was mainly due to increased sales of our endovascular and laparoscopy simulators. This increase in product sales was a result of pursuing a product growth strategy for our medical business, which includes leveraging our strategic industry alliances, and expanding international sales. We expect that the current economic downturn may have a negative effect on capital purchases of our products in the near term.
Development contract and other revenue Development contract and other revenue is comprised of revenue on commercial contracts and extended support and warranty contracts. Development contract and other revenue was $446,000 during the three months ended March 31, 2009, a decrease of $353,000 or 44% as compared to the three months ended March 31, 2008. The decrease was mainly attributable to a decrease in medical contract revenue of $535,000 due to the completion of work performed under medical contracts that occurred through the first six months of 2008. Partially offsetting that decrease was increased revenue recognized on Touch development contracts and support of $182,000. We do not currently have any government projects in development. We continue to transition our engineering resources from certain commercial development contract efforts to product development efforts that focus on leveraging our existing sales and channel distribution capabilities.
Cost of Product Sales Our cost of product sales (exclusive of amortization of intangibles) consists primarily of materials, labor, and overhead. There is no cost of product sales associated with royalty and license revenue or development contract revenue. Cost of product sales from continuing operations was $1.1 million, a decrease of $557,000 or 33% for the three months ended March 31, 2009 as compared to the three months ended March 31, 2008. The decrease in cost of product sales was primarily due to reduced obsolescence expense of $209,000, reduced direct material costs of $134,000, and reduced overhead costs of $120,000. The decrease in obsolescence expense was mainly due to lower excess and obsolescence write-off from medical, touch, and other parts in 2009. The decrease in direct material costs was mainly the result of a product mix change in medical product sales where we sold a greater percentage of products with higher margins. Overhead costs decreased mainly as a result of reduced salary expense from decreased headcount. Cost of product sales decreased as a percentage of product revenue to 41% in the first three months of 2009 from 63% in the first three months of 2008. This increase is mainly due to the reduced costs and the change in the product sales mix mentioned above.
Read the The complete ReportIMMR is in the portfolios of Richard Perry of Perry Capital.
