Disclosures

Immersion Corporation

I, Josh Nichols , certify that this report reflects my personal beliefs about this company and that no portion of my compensation was, is or will be directly or indirectly related to the specific recommendations or views discussed in this report.

Disclosure

  • B. Riley & Co., LLC, or any of its affiliates, does and seeks to do business with companies covered in its research reports.
  • A portion of this analyst’s compensation is based on the sales, trading and investment banking activities of B. Riley & Co., LLC.
  • B. Riley & Co., LLC makes a market in the securities of the company covered in this report.
  • This report may be distributed by FBR Capital Markets & Co., an affiliate of B. Riley & Co., LLC and as such constitutes third party research. For additional information, please visit http://www.fbr.com/disclosures.
Disclosure Chart

Initiated Coverage on 04/22/14 with a Buy Rating and Price Target of $16.50

Ratings Distribution as of August 21, 2017
Rating Number of Companies Percent of Total
Buy 145 74.4%
Neutral 49 25.1%
Sell 1 0.5%
Total 195 100%
% with Investment Banking Relationships
Rating Number of Companies Percent of Total
Buy 23 88.5%
Neutral 3 11.5%
Sell 0 0.0%
Total 26 100%

Explanation of B. Riley & Co. LLC's Rating System

  • Buy: We generally expect “Buy” rated stocks to have an above-average risk-adjusted total return over the next 12 months. We recommend that investors buy the securities at the current valuation.
  • Neutral: We generally believe “Neutral” rated stocks will have an average risk-adjusted total return over the next 12 months.
  • Sell: We generally expect “Sell” rated stocks to have a below-average risk-adjusted total return over the next 12 months. We recommend that investors reduce their positions until the valuation or fundamentals become more compelling.

Risks and Considerations

  • Acquisition/Integration - The Company actively evaluates potential acquisitions as part of its growth strategy. Acquisitions pursued by the Company could be dilutive to financial results and result in a difficult, dilutive or expensive integration.
  • Competition - The industry is highly competitive and many of the Company's competitors have greater resources.
  • Industry Change - The industry is subject to rapid technological change.
  • Insider Ownership - Directors and executive officers collectively own a significant percentage of the Company. While this may align interest with other shareholders, investors might view a future sale by any director or officer negatively.
  • Intellectual Property - The Company's business is dependent upon the licensing of its intellectual property (IP) to customers. Should the Company fail to maintain its IP or should the Company infringe upon another vendor's IP, financial results could be negatively impacted.
  • Litigation - The industry is litigious and the Company is likely to be involved in lawsuits, whether future or current. Negative results in these cases could result in significant cash payments by the Company.
  • General Industry - The Company could miss our estimates and/or their financial guidance.
  • Further Potential Risks - See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.

Additional Risks and Considerations

    Acquisition/Integration - Acquisitions pursued by the Company could be dilutive to financial results and result in a difficult, dilutive or expensive integration.       
    Competition - The industry is highly competitive and some of the Company's competitors have greater resources.        
    Financial Results - The Company's business may be affected by the general health in gaming, mobile communications, and advertising verticals.       
    Industry Change - The industry is subject to rapid technological change.        
    Insider Ownership - Directors and executive officers collectively own a significant percentage of the Company. While this may align interest with other shareholders, investors might view a future sale by any director or officer negatively.        
    Intellectual Property - The Company's business is dependent upon the licensing of its intellectual property (IP) to customers. Should the Company fail to maintain its IP or should the Company infringe upon others' IP, financial results could be negatively impacted.        
    Licensee Risk - Some licenses have variable components, and the Company's results will fluctuate with the success of its licensees' sales.       
    Licensee Risk - Licenses are subject to renewal, and the Company must successfully negotiate extensions and renewals with existing licencees.       
    Litigation - The Company is at risk of being forced to initiate patent lawsuits to enforce its IP, a process that can lead to unpredicable results.       
    Litigation - The industry is litigious and the Company is likely to be involved in lawsuits, whether future or current. Negative results in these cases could undermine the strength of its IP portfolio.       
    General Industry - The Company could miss our estimates and/or consensus.       
    Further Potential Risks - See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.       


    Company Specific Risk Factors:

    • The company’s biggest source of competition derives from decisions made by internal design groups at our OEM customers and potential OEM customers.  These internal design groups will continue to make choices regarding whether to implement haptics or not, whether to use IMMR’s solutions or other standard haptic capability (i.e., Android), or even whether to develop their own haptic solutions.
    • Automobiles and medical devices incorporating the company’s touch-enabled technologies are subject to lengthy product development period, which could be over four years.
    • Microsoft has a fixed payment license, so if Microsoft increases market share at the expense of other licenses royalty revenue may decline.
    • Failure to protect and enforce the company’s IP rights would impair revenue generation.
    • Third parties may assert that IMMR violated their IP rights.
    • The higher cost of incorporating the company’s products may slow or prevent widespread adoption.
    • Expansion into international markets carries inherent legal and execution risk.
    • To manufacture haptic-based products customers of IMMR need actuators and amplifiers.
    • In the past the company has had material weaknesses regarding internal controls over financial reporting.
    • Litigation expense is costly and difficult to predict.
    • Any issues with Samsung (which accounted for 47% of net revenues in 2013), or other major customers could significantly impact the company’s financial performance