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Patriot Ends Year With $10 Million Licensing Agreement With Intel

Patriot Scientific Corp., a San Diego-based firm that owns technology patents for a variety of microprocessors, said in its most recent quarterly financial report that it has entered into a $10 million licensing agreement with Intel Corp.

Added to a licensing agreement arranged earlier this year of $3 million with chip-maker AMD, that brings the total revenues generated by Patriot this year to $13 million. For the quarter ended Aug. 31, the company reported net income of $4.4 million on revenue of $10 million and cash on hand of $9.5 million.

That cash should help Patriot continue its legal fight to enforce what it alleges are patent infringements by the likes of the world’s largest electronics manufacturers, including Sony, Toshiba, Fujitsu and Matsushita (Panasonic).

Patriot is achieving some success in its legal battle with electronics conglomerates since joining forces with the TPL Group, a Cupertino firm that also claimed ownership of some of the same patents as Patriot, The two firms agreed in June to settle their differences and join forces to go after the users of the microprocessor technology and grab a share of an annual global market estimated at $200 billion.

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The strategy the companies are using entails striking one-time settlements rather than collecting royalty payments based on a company’s sales of products, said David Pohl, Patriot Scientific’s chairman and CEO.

As a way of accelerating the court litigation, Patriot and TPL withdrew their suits against the Japanese manufacturers in the Federal District Court in Northern California and filed the same suits in the Federal District Court of East Texas and in the Federal District Court of Virginia.

The transfer to the new venues was done because both courts have a history of not permitting delaying tactics by defending larger corporations, Pohl said.

Pohl couldn’t say when or how much in future settlements Patriot may collect from the manufacturers, but the recent agreement with Intel has given him hope.

In other news involving Patriot, former Chief Financial Officer Lowell Giffhorn filed a claim seeking $1.5 million in severance he said is owed to him following his termination in June. In his claim, Giffhorn asserts his termination was unlawful.

Pohl said Giffhorn’s contract called for paying a severance that amounted to about three to four months his salary of about $120,000. He said Giffhorn is demanding an amount more than 30 times what his contract specifies.

The parties have agreed to submit the issue to an outside arbitrator that has yet to be selected, Pohl said.

All of this news barely caused a ripple in Patriot’s stock, traded on the over-the-counter bulletin board. Shares closed at 11 cents and hovered between 11 and 12 cents in the past three months.

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Sales And Profits Rise:

ViaSat Inc., a Carlsbad-based maker of satellite and wireless equipment, beat its second-quarter projections in reporting net income of $6 million on sales of $104 million for the quarter that ended Sept. 30. That compared with the same period last year, when ViaSat had net earnings of $3.7 million on revenues of $82.6 million.

For the first six months of its fiscal year, ViaSat reported net profits of $11.1 million on revenues of $204.1 million, up from $7.3 million on revenue of $166.8 million in the prior fiscal year’s first half.

New contract awards totaled $232.2 million for the first half, compared with $189.3 million in the prior year’s first half.

ViaSat’s wireless communications equipment was deployed in the areas that were hit by recent hurricanes. It also continues to gain market share for its products in India and China, the company said.

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Stock Slide:

Shares of Wireless Facilities Inc., the San Diego manager of wireless networks for large carriers, declined $1.29 or nearly 29 percent to $5.53 on Nasdaq after the firm released its third quarter results Nov. 7.

This, despite fact that net income for the quarter was $5.8 million or 8 cents per shares, compared to a loss of $14.9 million or 22 cents per share in the like period of 2004.

Revenue was also up 14 percent to $108.9 million compare to $95.8 million in the third quarter of last year.

The bad news was the company forecast lower earnings for the fourth quarter due to problems with its Latin American business that would cause a reduction of $15 million in revenues.

Wireless Facilities also noted revenue and profits would be hurt by delays and increased costs involving projects in the Southeast as a result of the hurricanes.

The company projected flat sales for this quarter and net earnings between 5 and 6 cents per share.

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Triple Play:

InfoSonics Corp., the San Diego-based distributor of cell phones, reported net income of $1.17 million on revenues of $54.2 million for its third quarter. That compared to a net loss of about $460,000 on revenues of $17.4 million.

Besides a tripling of revenue, the company also reported units shipped up 318 percent over the year, offsetting a 25 percent decrease in the average selling price.

For the nine months, net income was $1.9 million, on revenues of $110.8 million, compared to net loss of $34,438 on revenue of $53.8 million.

Traded on the American Stock Exchange, shares closed Nov. 8 , the date the results were released , at $7.36, up $2.34 over the previous day close. The stock went public last year at $6.

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More Increases:

Websidestory Inc., a San Diego-based provider of Web site marketing analysis, reported net income of $1.8 million on revenues of $11.3 million for its third quarter ended Sept.30, compared with net income of $657,000 on revenues of $5.7 million for the like period of last year.

For the nine months, the company reported net income of $4.2 million on revenues of $27.7 million, compared with net income of $1 million on $16 million in revenues.

Websidestory also said it will have to restate its financial results for last year, and for the first two quarters of this year, because of corrections in the way the firm was reporting expenses on the sublease of its building. The net effect from the restatement will be greater rental expenses for its 2001 and 2003 fiscal years, and reduction of expenses in 2002 and 2004 fiscal years, including increased profits of $177,000 for last year.

Part of the reason behind the nearly doubling of sales from the prior third quarter was the acquisition of Atomz, a San Francisco-based analytics firm, completed in April.

Traded on Nasdaq under WSSI, shares closed at $17.37 on Nov. 7, and have ranged from $9.95 to $19.10 in the past 52 weeks.

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Even More Increases:

Encore Capital Group Inc., a San Diego-based buyer and collector of charged-off credit card debt, reported record collections of nearly $84 million for its third quarter, up 40 percent from the prior year’s third quarter. The rise contributed to a 32 percent jump in net income to $7.7 million on revenues of $59.2 million, compared with net income of $5.8 million on revenues of $46.5 million for the like period of 2004.

For the nine months, Encore reported net income of $23.2 million on revenues of $163.4 million, compared with net income of $17.5 million on revenues of $132.5 million.

During the past quarter, Encore paid $14.2 million to buy $381.5 million in face value debt. For the nine months, the company spent $155.6 million to buy $4.6 billion in face value debt.

Traded on the Nasdaq as ECPG, shares closed at $15.72 on Nov. 7, and have ranged from $12.55 to $26.73 for the past 52 weeks.

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Larger Loss:

Maxwell Technologies Inc., a San Diego-based maker of ultra-capacitors and other power delivery devices, reported a net loss of $1.3 million on sales of $12 million for the third quarter, compared with a net loss of $2.4 million on $6.7 million in sales for the same period of 2004. For the nine months, Maxwell reported a net loss of $5.2 million on sales of $32.8 million, compared with a net loss of $3.9 million on sales of $22.7 million.

The company said a 9 percent quarter-to-quarter growth in revenues exceeded expectations and will help drive continued top line growth for the fourth quarter, and improved bottom line performance.

Traded as MXWL, shares closed at $13.05 on Nov. 7, and have ranged from $7.41 to $15.36 during the past 52 weeks.

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A Hit In Europe:

Mad Catz Interactive Inc., a San Diego-based maker of video game accessories, reported a net loss of $1.2 million for its fiscal second quarter on revenues of $23.7 million. Sales increased 14.9 percent from the prior year’s second quarter. It had a net profit of $300,000 for that quarter.

Mad Catz said it more than doubled its European sales to $5.1 million during the past year, while Canadian sales increased nearly 30 percent to $2.1 million.

Traded on AMEX under the ticker MCZ, shares closed at 72 cents on Nov.7 and ranged from 59 cents to $1.83 in the past 52 weeks.

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Slow Season No Deterrent:

Provide Commerce Inc., the parent firm of Proflowers.com and other e-commerce retail businesses, reported a net loss of $23,000 on revenues of $26.8 million for its first quarter ended Sept. 30, compared with a net loss of $497,000 on $19.9 million in sales for the same period of 2004.

Despite the past quarter being one of the slower times of the year for florists, Provide Commerce said sales jumped 34 percent and should enjoy similar growth for the remainder of this fiscal year.

The company added about 150,000 new customers, up 28 percent from the prior year’s first quarter, and boosted its total customer base to 4.5 million. That was 39 percent better than the total customers reported for the like period of last year.

Traded on Nasdaq as PRVD, shares closed at $24.97 on Nov. 7, and have ranged from $16.68 to $38.75 in the past 52 weeks.

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Bagheri On Board:

Applied Micro Circuits Corp., a San Diego maker of high-speed chips used in telecommunications networks, said Timothy Heenan, its senior vice president of operations and quality, has resigned and was replaced by Robert Bagheri.

Bagheri has more than 24 years of experience in manufacturing operations and quality functions in high-tech.

AMCC also reported a net loss of $6.4 million on revenues of $69.9 million for its second quarter ended Sept. 30, compared with a net loss of $18.3 million on $61 million for the like period of 2004. For the first six months, AMCC reported a net loss of $10.6 million on revenues of $129.6 million, compared with a net loss of $39.8 million on revenues of $128.5 million.

Not including a host of expenses, such as restructuring costs caused by layoffs in the prior quarter and amortization on purchased intangibles, AMCC reported operating profits for the quarter of $4 million, its third consecutive quarter of “pro forma” profit. However, using generally accepted accounting principles, the net losses continue and date back to fiscal 2000.

AMCC, traded on Nasdaq, closed at $2.70 on Nov. 7, and has ranged from $2.32 to $4.37 in the past 52 weeks.

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Ticker Takes:

Qualcomm Inc. approved a $2.5 billion stock repurchase program. Vital Therapies Inc. said it closed an $8 million private equity round of financing. American Mortgage Network funded $1.5 billion in October, up from $764 million in the same month of 2004. Phoenix Footwear Group reported net income of $981,000 on sales of $34.3 million for its third quarter, a 48 percent rise in sales from the prior year’s third.


Send any news of San Diego-based public companies to Mike Allen via e-mail at mallen@sdbj.com. He can be reached at (858) 277-6359.

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