NEW YORK (TheStreet) -- Vringo (VRNG spiked 19.7% to $3.74 Wednesday after a U.S. District Court ruled in favor of the telecom's subsidiary in a patent lawsuit against a number of companies including Google (GOOG - Get Report) and AOL (AOL.
The U.S. District Court for the Eastern District of Virginia ruled that Vringo subsidiary I/P Engine is entitled to "ongoing royalties" from the companies. The telecom sued Google, AOL and other companies saying their web search products infringed on patents that it owns.
The court deferred ruling on the royalty rates the companies will have to pay I/P Engine. The companies involved are scheduled to hold settlement talks before a U.S. Magistrate Judge later today.
On Nov. 6, 2012, a jury in the U.S. District Court in Norfolk, Va. ruled in favor of the Vringo subsidiary, awarding the company a "running royalty" rate of 3.5% and $30.5 million. On Jan. 3, 2014 the District Court ordered that I/P Engine receive an additional $17.32 million from the defendants to cover supplemental damages and prejudgment interest.
TheStreet Ratings team rates Vringo as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate VRINGO INC (VRNG) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- VRNG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 9.66, which clearly demonstrates the ability to cover short-term cash needs.
- Compared to other companies in the Software industry and the overall market, VRINGO INC's return on equity significantly trails that of both the industry average and the S&P 500.
- VRINGO INC has improved earnings per share by 27.8% in the most recent quarter compared to the same quarter a year ago. For the next year, the market is expecting a contraction of 13.6% in earnings (-$0.50 versus -$0.44).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 238.0% when compared to the same quarter one year ago, falling from -$3.12 million to -$10.56 million.
- Net operating cash flow has significantly decreased to -$6.42 million or 87.05% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: VRNG Ratings Report