Shares of Immersion Corporation Surge on Deal with Samsung

Immersion Corp (NASDAQ: IMMR), and the Settlement

Immersion Corp (NASDAQ: IMMR), After the bang

Immersion Corp (NASDAQ: IMMR), After the bang

Immersion Corporation (NASDAQ: IMMR) rallied last Tuesday after it announced its license agreement with Google Inc. (NASDAQ: GOOG). The California-based Computer Peripherals Company announced that it had reached a settlement and license agreement with the search engine giant and Motorola Mobility LLC that resolves a patent-infringement lawsuit it brought against Motorola.

Immersion Corp. stock rallied 34.75 percent, or $1.63 rise to close at $6.32 following the announcement, which is just over one dollar shy of its 52 week high of $7.50 per share.

Immersion provides haptic technologies that allow people to use their sense of touch when operating various digital devices. Its technologies are licensed to the original equipment manufacturers or their suppliers to include technologies in products comprising mobile phones, video console gaming, consumer electronics, medical simulation and surgical robotic systems among others.

Under the agreement, Immersion Corporation will receive compensation for all shipments by Motorola that use haptic technology. However, the deal does not involve other handset manufacturers of Android O.S devices like Samsung Electronics Co. Ltd, HTC Corporation and Sony (NYSE: SNE).

Following the settlement, Immersion Corp noted that it would dismiss all pending litigation against Motorola. The company’s Chief Executive Officer Victor Viegas was quoted in a statement saying that the settlement would be insignificant with regard to the impact on Immersion’s 2012 results.  Nonetheless, it seems as though the investors won’t have to wait for 2013, in order to realize the benefits.

The big Fish companies are in the hunt to acquire such small firms to complement their leadership status. A good example is Apple Inc. (NASDAQ:AAPL), which acquired AuthenTec mid this year. AuthenTec is a leading provider of Mobile and network security using finger print technology. Another scenario is depicted in Facebook Inc. (NASDAQ:FB)’s acquisition of Instagram, and Google’s purchase of Snapseed photo management application.

Therefore, Immersion Corporation is one of the few small companies in a position to sue the smartphone tech giants over some patent infringements. This is a big step forward to Immersion as the settlement gives a guaranteed stream of income. The company also stands benefit from Google’s massive brand, as well as Android’s giant market share in the smartphone’s industry, should Samsung Electronics Company Ltd consider including its android devices.

Immersion Corporation (NASDAQ:IMMR) closed at $6.67 per share on Wednesday and opened today at $6.78. However, the stock experienced a slight decline during the early trading hours. It was trading at $6.52 at 11.30 a.m with volume movements averaging 138,741 for the day, well above the three-month average of 120,942. The company’s market capitalization stood at $177.55 million on Thursday.


Related News