October 29, 2009 / 8:49 PM / 10 years ago

UPDATE 2-Tessera Q3 profit beats Street view, sees weak Q4 rev

* Q3 rev $66.1 mln, up 4 pct

* Sees Q4 rev $60 mln-$62 mln

* Shares fall 14 pct (Adds conference call details, analyst’s comment, updates share movement)

By Saqib Iqbal Ahmed

BANGALORE, Oct 29 (Reuters) - Chip technology developer Tessera Technologies Inc TSRA.O posted a better-than-expected quarterly profit but forecast weak fourth-quarter revenue, sending its shares down as much as 14 percent.

The company cited volume-based pricing incentives with two major dynamic random access memory (DRAM) chip customers for the sequential drop in current quarter revenue.

On a call with analysts, the company said the impact of these incentives could carry through to the first quarter of fiscal 2010.

Tessera forecast revenue of $60 million to $62 million for the fourth quarter, down from $66.1 million in the third quarter.

Analysts, on average, expect fourth-quarter revenue of $70 million and third-quarter revenue of $65.7 million, according to Thomson Reuters I/B/E/S.

“It’s tough for Tessera to figure out the timing when some of their DRAM licensees hit the trigger point of volume discounts,” said Raymond James analyst Hans Mosesmann.

Most of the top DRAM companies, including Samsung Electronics Co Ltd (005930.KS), Hynix Semiconductor Inc (000660.KS) and Micron Technology Inc MU.N, are likely customers of Tessera, Mosesmann said.

STRONG THIRD QUARTER

Net income for the third-quarter was $12.1 million, or 24 cents a share, compared with a loss of $5.4 million, or 11 cents a share, a year ago.

Excluding special items, the company earned 37 cents a share. Analysts were expecting 21 cents a share.

Micro-electronics revenue of $59.1 million, a part of Tessera’s intellectual property segment, was entirely from royalties and licence fee, the company said.

Tessera receives royalties from a host of companies including Intel Corp (INTC.O), Sony Corp (6758.T) and Siemens AG (SIEGn.DE).

Shares of San Jose, California-based Tessera, which have risen 86 percent in the last six months, fell 14 percent to $23.10 in trading after the bell. They had closed at $26.86 Thursday on Nasdaq. (Reporting by Saqib Iqbal Ahmed in Bangalore, Editing by Saumyadeb Chakrabarty)

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