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Immersion Corp. Reports Operating Results (10-Q)

February 08, 2010 | About:
10qk

10qk

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Immersion Corp. (IMMR) filed Quarterly Report for the period ended 2009-09-30.

Immersion Corp. has a market cap of $131.4 million; its shares were traded at around $4.7 with and P/S ratio of 3.6.

Highlight of Business Operations:

We have acquired patents and other intangible assets. In addition, we capitalize the external legal and filing fees associated with patents and trademarks. We assess the recoverability of our intangible assets, and we must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets that affect our consolidated financial statements. If these estimates or related assumptions change in the future, we may be required to record impairment charges for these assets. We amortize our intangible assets related to patents and trademarks, once they issue, over their estimated useful lives, generally 10 years. Future changes in the estimated useful life could affect the amount of future period amortization expense that we will incur. During the nine months ended September 30, 2009, we capitalized costs associated with patents and trademarks of $1.8 million. Our total amortization expense for the three months and nine months ended September 30, 2009 for all intangible assets was $216,000 and $655,000, respectively.

In conjunction with moving our medical operating segment to San Jose, our reduction of workforce from our Montreal medical business operations, and other workforce reductions in our Touch segment, we had restructuring costs of $181,000 and $1.5 million for the three and nine months ended September 30, 2009, respectively. We had physical inventory write offs of $583,000 for the nine months ended September 30, 2009 primarily consisting of physical count to book adjustments of medical equipment parts. We also recognized fixed asset write offs of demo equipment of $668,000 for the nine months ended September 30,

We divested our 3D product line and recorded gains (losses) of $(17,000) and $384,000 from discontinued operations for the three and nine months ended September 30, 2009, respectively. This was compared to gains of $165,000 and $701,000 for the three and nine months ended September 30, 2008, respectively. We also had gains on sales of discontinued operations of $20,000 and $207,000 for the three and nine months ended September 30, 2009, respectively. Our net loss was $9.0 million for the third quarter of 2009 compared to a net loss of $33.7 million for the third quarter of 2008. Our net loss was $24.0 million for the nine months ended September 30, 2009 compared to a net loss of $40.3 million for the nine months ended September 30, 2008.

Product sales Product sales for the third quarter of 2009 were $3.5 million, an increase of $1.7 million or 97% as compared to the third quarter of 2008. The increase in product sales was primarily due to an increase in medical product sales partially offset by a decrease in touch product sales. Increased medical product sales were mainly due to the recognition of $1.3 million in revenue from an international medical customer with whom certain commitments may have been made in the form of an apparent side agreement, more fully described in our 2008 Form 10-K/A. As a result, we concluded that revenues from this customer for shipments made in earlier periods could not be recognized until the agreement with the customer was terminated in the third quarter of 2009.

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 of $10.2 million, a decrease of $1.2 million or 10% from the nine months ended September 30, 2008. The decrease in royalty and license revenue was primarily due to a decrease in royalty and license revenue from our Touch segment from decreased revenue from gaming and automotive licensees partially offset by increased revenue from licensees of mobile devices. Revenues from gaming customers in the first nine months of 2008 which did not recur in the first nine months of 2009 included previously deferred revenues from ISLLC totaling $1.1 million which was recognized after we concluded our litigation with them.

Product sales Product sales for the nine months ended September 30, 2009 were $9.5 million, an increase of $1.4 million or 18% as compared to the nine months ended September 30, 2008. The increase in product sales was primarily due to an increase in medical product sales partially offset by a decrease in touch product sales. Increased medical product sales were mainly due to the recognition of $1.0 million in revenue from an international medical customer with whom certain commitments may have been made in the form of an apparent side agreement, more fully described in our 2008 Form 10-K/A. As a result, we concluded that revenues from this customer for shipments made in earlier periods could not be recognized until the agreement with the customer was terminated in the third quarter of 2009. We believe that the current economic downturn may have a negative effect on capital purchases of our products in the near term.

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