Tessera Axes Wafer Level Optics Activity

Seeking Alpha published Tessera Q3 2010 Earnings Call transcript. Some interesting quotes:

Hank Nothhaft, CEO:

"I want to discuss the Wafer-Level Optics portion of our Imaging and Optics business. We conducted an exhaustive evaluation over the past few months of various strategic options for our Wafer-Level Optics for camera modules technology. Our findings are that though Wafer-Level Optics remains a competitive technology solution, improvements in cost and manufacturability of alternative technologies has diminished the disruptive nature of Wafer-Level Optics to such an extent that pursuing a licensing strategy further would not generate results consistent with our expectations.

We concluded the best alternative was to cease further development of this technology and pursue a long-term vision of generating revenues through more Imaging and Optics product opportunities."

Kevin Vassily - Pacific Crest:

"...on the Wafer-Level Optics wind-down, I guess you can you at all quantify what level of contribution to that Imaging and Optics line on the royalty side was coming from this part of the business?"

Hank Nothhaft

"Yes, we have not reported any royalties in our Imaging and Optics business from Wafer-Level Optics."

Kevin Vassily - Pacific Crest:

"...what does that do to the opportunity for some of your other imaging technologies, is the market opportunity diminished at all, maybe you could just frame the lack of uptake of the Wafer-Level Optics side to the adoption of other technologies that you guys have in your portfolio?"

Hank Nothhaft:

"Pricing for lens technology in general, as it relates to the wireless market, has been very intense, and prices have come down very sharply. And so it diminished the value of a licensing model in that market. Also, glass and injected molded plastics have become much more competitive. And glass, traditional glass lenses in particular have become much more manufacturable and are able to be used in reflow environments. So I just want to make the point that we’re not saying that Wafer-Level Optics is not a competitive technology, because we believe that it is, but only in the sense if you were manufacturing those lenses and competing against the alternatives that I just mentioned.

...our skill set is really more in lens design, algorithm development and that sort of efforts, and so finally, we decided it did not make sense and did not play to our core competencies.

...our major growth opportunities for ...the next couple of years being in three major areas:

One is our extended depth of field.

...We created a very strong capability in our optical zoom. It's really a very disruptive technology, ...there has been tremendous interest in the market in the product. The pricing on that is several orders of magnitude higher than our accepted depth of field technology. ...it does save on the cost side of the equation to the handset manufacturer. It represents maybe 20% of the cost of ...a mechanical zoom system.

we’re very pleased with our acquisition of Siimpel. ...We are very far along in completing development of the second-generation product, which is smaller, works quicker, faster. There is tremendous interest in the market in that product and we believe we'll have revenue coming from MEMS starting in the second half of next year."

Unidentified Analyst:

"...on the Wafer-Level Optics, are you able to sell that business to anybody?"

Hank Nothhaft:

"There's always the possibility something can happen in the future, but I'm certainly not anticipating that to occur at this point in time."

Hank Nothhaft on EDoF royalties:

"our ...EDOF technology continues to gain market adoption. ...our ...EDOF royalties nearly tripled in the third quarter of 2010 as compared to the third quarter of 2009."

EETimes also has an article on Tessera dropping Wafer Level Optics.