Tessera Technologies, Inc. (NASDAQ:TSRA)

So why do I like this business?
There is the short answer and there is the long answer.
The short answer is – This is a nicely growing business with no debt and about 550 Millions in Cash, making more than 50 Millions a year, and selling for 800 Millions.

The long answer is, it is more appropriate to look at this business as two different businesses, the Micro-Electronics segment, and the Imaging & Optics segment. We will consider each with assets of about 300 millions.

The Micro-Electronics segments is a thriving business. It’s revenues of about 250 M’s, are almost entirely from royalties on its hundreds of patents, regarding the building of micro-electronic chips, present virtually in every computer, smart phone, or tablet in the (growing) market, both in and out of the US.
It makes about 150 M a year (operating income) or 100 M Net Income. It continues to develop new technologies for miniature chip packaging, and is likely to continue growing.
It has some litigation issues, which, frankly, I understand nothing in. But I do understand that litigation are an inherent part of the intellectual property business, and I have no reason to assume it is going to lose half it’s income.
So, I would say this business is worth about 1.5 Billion.

The Imaging & Optics business is a start-up company developing technologies mainly for camera-phones. It already has a moderate income of about 30M a year, but it spends a lot (perhaps too much ?) on R&D, resulting in a net loss of about 50 M a year.
Now, you may like this start-up company, or you may not like it. It is hard to put a price-tag on it, but I can tell you it ain’t minus one billion…

So combine the two businesses together for a price of 800 M, and you have got yourself an excellent deal.